[Congressional Record Volume 156, Number 154 (Tuesday, November 30, 2010)]
[Senate]
[Pages S8305-S8308]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                RESTORE ONLINE SHOPPERS' CONFIDENCE ACT

  Mrs. HAGAN. Mr. President, I ask unanimous consent the Senate proceed 
to the immediate consideration of Calendar No. 500, S. 3386.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The assistant legislative clerk read as follows:

       A bill (S. 3386) to protect consumers from certain 
     aggressive sales tactics on the Internet.

  There being no objection, the Senate proceeded to consider the bill 
(S. 3386) to protect consumers from certain aggressive sales tactics on 
the Internet, which had been reported from the Committee on Commerce, 
Science, and Transportation, with an amendment to strike all after the 
enacting clause and insert in lieu thereof the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Restore Online Shoppers' 
     Confidence Act''.

     SEC. 2. FINDINGS; DECLARATION OF POLICY.

       The Congress finds the following:
       (1) The Internet has become an important channel of 
     commerce in the United States, accounting for billions of 
     dollars in retail sales every year. Over half of all American 
     adults have now either made an online purchase or an online 
     travel reservation.
       (2) Consumer confidence is essential to the growth of 
     online commerce. To continue its development as a 
     marketplace, the Internet must provide consumers with clear, 
     accurate information and give sellers an opportunity to 
     fairly compete with one another for consumers' business.
       (3) An investigation by the Senate Committee on Commerce, 
     Science, and Transportation found abundant evidence that the 
     aggressive sales tactics many companies use against their 
     online customers have undermined consumer confidence in the 
     Internet and thereby harmed the American economy.
       (4) The Committee showed that, in exchange for ``bounties'' 
     and other payments, hundreds of reputable online retailers 
     and websites shared their customers' billing information, 
     including credit card and debit card numbers, with third 
     party sellers through a process known as ``data pass''. These 
     third party sellers in turn used aggressive, misleading sales 
     tactics to charge millions of American consumers for 
     membership clubs the consumers did not want.
       (5) Third party sellers offered membership clubs to 
     consumers as they were in the process of completing their 
     initial transactions on hundreds of websites. These third 
     party ``post-transaction'' offers were designed to make 
     consumers think the offers were part of the initial purchase, 
     rather than a new transaction with a new seller.
       (6) Third party sellers charged millions of consumers for 
     membership clubs without ever obtaining consumers' billing 
     information, including their credit or debit card 
     information, directly from the consumers. Because third party 
     sellers acquired consumers' billing information from the 
     initial merchant through ``data pass'', millions of consumers 
     were unaware they had been enrolled in membership clubs.
       (7) The use of a ``data pass'' process defied consumers' 
     expectations that they could only be charged for a good or a 
     service if they submitted their billing information, 
     including their complete credit or debit card numbers.
       (8) Third party sellers used a free trial period to enroll 
     members, after which they periodically charged consumers 
     until consumers affirmatively canceled the memberships. This 
     use of ``free-to-pay conversion'' and ``negative option''

[[Page S8306]]

     sales took advantage of consumers' expectations that they 
     would have an opportunity to accept or reject the membership 
     club offer at the end of the trial period.

     SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DECEPTIVE 
                   INTERNET SALES PRACTICES.

       (a) Requirements for Certain Internet-Based Sales.--It 
     shall be unlawful for any post-transaction third party seller 
     to charge or attempt to charge any consumer's credit card, 
     debit card, bank account, or other financial account for any 
     good or service sold in a transaction effected on the 
     Internet, unless--
       (1) before obtaining the purchaser's billing information, 
     the post-transaction third party seller has clearly and 
     conspicuously disclosed to the purchaser all material terms 
     of the transaction, including--
       (A) a description of the goods or services being offered;
       (B) the fact that the post-transaction third party seller 
     is not affiliated with the initial merchant, which may 
     include disclosure of the name of the post-transaction third 
     party in a manner that clearly differentiates the post-
     transaction third party seller from the initial merchant; and
       (C) the cost of such goods or services; and
       (2) the post-transaction third party seller has received 
     the express informed consent for the charge from the consumer 
     whose credit card, debit card, bank account, or other 
     financial account will be charged by--
       (A) obtaining from the consumer--
       (i) the full account number of the account to be charged; 
     and
       (ii) the consumer's name and address and a means to contact 
     the consumer; and
       (B) requiring the consumer to perform an additional 
     affirmative action, such as clicking on a confirmation button 
     or checking a box that indicates the consumer's consent to be 
     charged the amount disclosed.
       (b) Prohibition on Data-Pass Used To Facilitate Certain 
     Deceptive Internet Sales Transactions.--It shall be unlawful 
     for an initial merchant to disclose a credit card, debit 
     card, bank account, or other financial account number, or to 
     disclose other billing information that is used to charge a 
     customer of the initial merchant, to any post-transaction 
     third party seller for use in an Internet-based sale of any 
     goods or services from that post-transaction third party 
     seller.
       (c) Limitations on Use of Negative Option Feature in 
     Internet-Based Sales Transactions.--It shall be unlawful for 
     any person to charge or attempt to charge any consumer for 
     any goods or services sold in a transaction effected on the 
     Internet through a negative option feature, unless--
       (1) before obtaining the purchaser's initial agreement to 
     participate in the negative option plan, the seller has 
     clearly and conspicuously disclosed all material terms of the 
     transaction, including--
       (A) the name of the entity offering the goods or services;
       (B) a description of the goods or services being offered;
       (C) the cost of such goods or services;
       (D) notice of when billing will begin and at what intervals 
     the charges will occur;
       (E) the length of any trial period, including a statement 
     that the consumer's account will be charged unless the 
     consumer takes affirmative action and the steps the consumer 
     must take to the avoid the charge; and
       (F) instructions for stopping the recurring charges in 
     accordance with the requirements of paragraph (3);
       (2) the seller has obtained the express informed consent 
     described in subsection (a)(2) from the purchaser before 
     charging or attempting to charge the purchaser's credit card, 
     debit card, bank account, or other financial account on a 
     recurring basis; and
       (3) the seller enables the purchaser to stop recurring 
     charges from being made to the purchaser's credit card, debit 
     card, bank account, or other financial account through a 
     simple process that is available via--
       (A) the Internet; or
       (B) e-mail.
       (d) Application with Other Law.--Nothing in this Act shall 
     be construed to supersede, modify, or otherwise affect the 
     requirements of the Electronic Funds Transfer Act (15 U.S.C. 
     1693 et seq.) or any regulation promulgated thereunder.
       (e) Definitions.--In this section:
       (1) Initial merchant.--The term ``initial merchant'' means 
     a person that has obtained a consumer's billing information 
     directly from the consumer through an Internet transaction 
     initiated by the consumer.
       (2) Negative option feature.--The term ``negative option 
     feature'' has the meaning given that term in section 310.2(t) 
     of the Federal Trade Commission's Telemarketing Sales Rule 
     regulations (16 C.F.R. 310.2(t)).
       (3) Post-transaction third party seller.--The term ``post-
     transaction third party seller'' means a person that--
       (A) sells, or offers for sale, any good or service on the 
     Internet;
       (B) solicits the purchase of such goods or services on the 
     Internet through an initial merchant after the consumer has 
     initiated a transaction with the initial merchant; and
       (C) is not a subsidiary or corporate affiliate of the 
     initial merchant.

     SEC. 4. ENFORCEMENT BY FEDERAL TRADE COMMISSION.

       (a) In General.--Violation of this Act or any regulation 
     prescribed under this Act shall be treated as a violation of 
     a rule under section 18 of the Federal Trade Commission Act 
     (15 U.S.C. 57a) regarding unfair or deceptive acts or 
     practices. The Federal Trade Commission shall enforce this 
     Act in the same manner, by the same means, and with the same 
     jurisdiction, powers, and duties as though all applicable 
     terms and provisions of the Federal Trade Commission Act (15 
     U.S.C. 41 et seq.) were incorporated into and made a part of 
     this Act.
       (b) Regulations.--Notwithstanding any other provision of 
     law, the Commission may promulgate such regulations as it 
     finds necessary or appropriate under this Act under section 
     553 of title 5, United States Code.
       (c) Penalties.--Any person who violates this Act or any 
     regulation prescribed under this Act shall be subject to the 
     penalties and entitled to the privileges and immunities 
     provided in the Federal Trade Commission Act as though all 
     applicable terms and provisions of the Federal Trade 
     Commission Act were incorporated in and made part of this 
     Act.
       (d) Authority Preserved.--Nothing in this section shall be 
     construed to limit the authority of the Commission under any 
     other provision of law.

     SEC. 5. ENFORCEMENT BY STATE ATTORNEYS GENERAL.

       (a) Right of Action.--Except as provided in subsection (e), 
     the attorney general of a State, or other authorized State 
     officer, alleging a violation of this Act or any regulation 
     issued under this Act that affects or may affect such State 
     or its residents may bring an action on behalf of the 
     residents of the State in any United States district court 
     for the district in which the defendant is found, resides, or 
     transacts business, or wherever venue is proper under section 
     1391 of title 28, United States Code, to obtain appropriate 
     injunctive relief.
       (b) Notice to Commission Required.--A State shall provide 
     prior written notice to the Federal Trade Commission of any 
     civil action under subsection (a) together with a copy of its 
     complaint, except that if it is not feasible for the State to 
     provide such prior notice, the State shall provide such 
     notice immediately upon instituting such action.
       (c) Intervention by the commission.--The Commission may 
     intervene in such civil action and upon intervening--
       (1) be heard on all matters arising in such civil action; 
     and
       (2) file petitions for appeal of a decision in such civil 
     action.
       (d) Construction.--Nothing in this section shall be 
     construed--
       (1) to prevent the attorney general of a State, or other 
     authorized State officer, from exercising the powers 
     conferred on the attorney general, or other authorized State 
     officer, by the laws of such State; or
       (2) to prohibit the attorney general of a State, or other 
     authorized State officer, from proceeding in State or Federal 
     court on the basis of an alleged violation of any civil or 
     criminal statute of that State.
       (e) Limitation.--No separate suit shall be brought under 
     this section if, at the time the suit is brought, the same 
     alleged violation is the subject of a pending action by the 
     Federal Trade Commission or the United States under this Act.

  Mrs. HAGAN. I ask unanimous consent that a Rockefeller-Hutchison 
managers' amendment which is at the desk be agreed to, the committee 
substitute amendment, as amended, be agreed to, the bill as amended be 
read a third time and passed, the motion to reconsider be laid upon the 
table, with no intervening action or debate, and any statements be 
printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 4721) was agreed to, as follows:

(Purpose: To make minor and technical changes in the bill as reported, 
                        and for other purposes)

       On page 15, line 17, strike ``purchaser's'' and insert 
     ``consumer's''.
       On page 15, line 19, strike ``purchaser'' and insert 
     ``consumer''.
       On page 17, beginning with line 4, strike through line 15 
     on page 18.
       On page 18, line 16, strike ``(d)'' and insert ``(c)''.
       On page 18, line 21, strike ``(e)'' and insert ``(d)''.
       On page 19, strike lines 3 through 7.
       On page 19, line 8, strike ``(3)'' and insert ``(2)''.
       On page 19, strike lines 17 and 18 and insert the 
     following:
       (C) is not--
       (i) the initial merchant;
       (ii) a subsidiary or corporate affiliate of the initial 
     merchant; or
       (iii) a successor of an entity described in clause (i) or 
     (ii).
       On page 19, between line 18 and 19, insert the following:

     SEC. 4. NEGATIVE OPTION MARKETING ON THE INTERNET.

       It shall be unlawful for any person to charge or attempt to 
     charge any consumer for any goods or services sold in a 
     transaction effected on the Internet through a negative 
     option feature (as defined in the Federal Trade Commission's 
     Telemarketing Sales Rule in part 310 of title 16, Code of 
     Federal Regulations), unless the person--
       (1) provides text that clearly and conspicuously discloses 
     all material terms of the transaction before obtaining the 
     consumer's billing information;
       (2) obtains a consumer's express informed consent before 
     charging the consumer's credit card, debit card, bank 
     account, or other financial account for products or services 
     through such transaction; and

[[Page S8307]]

       (3) provides simple mechanisms for a consumer to stop 
     recurring charges from being placed on the consumer's credit 
     card, debit card, bank account, or other financial account.
       On page 19, line 19, strike ``SEC. 4.'' and insert ``SEC. 
     5.''.
       On page 20, strike lines 5 through 8.
       On page 20, line 9, strike ``(c)'' and insert ``(b)''.
       On page 20, line 16, strike ``(d)'' and insert ``(c)''.
       On page 20, line 19, strike ``SEC. 5.'' and insert ``SEC. 
     6.''.

  The Committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The bill (S. 3386), as amended, was ordered to be engrossed for a 
third reading, was read the third time, and passed, as follows:

                                S. 3386

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Restore Online Shoppers' 
     Confidence Act''.

     SEC. 2. FINDINGS; DECLARATION OF POLICY.

       The Congress finds the following:
       (1) The Internet has become an important channel of 
     commerce in the United States, accounting for billions of 
     dollars in retail sales every year. Over half of all American 
     adults have now either made an online purchase or an online 
     travel reservation.
       (2) Consumer confidence is essential to the growth of 
     online commerce. To continue its development as a 
     marketplace, the Internet must provide consumers with clear, 
     accurate information and give sellers an opportunity to 
     fairly compete with one another for consumers' business.
       (3) An investigation by the Senate Committee on Commerce, 
     Science, and Transportation found abundant evidence that the 
     aggressive sales tactics many companies use against their 
     online customers have undermined consumer confidence in the 
     Internet and thereby harmed the American economy.
       (4) The Committee showed that, in exchange for ``bounties'' 
     and other payments, hundreds of reputable online retailers 
     and websites shared their customers' billing information, 
     including credit card and debit card numbers, with third 
     party sellers through a process known as ``data pass''. These 
     third party sellers in turn used aggressive, misleading sales 
     tactics to charge millions of American consumers for 
     membership clubs the consumers did not want.
       (5) Third party sellers offered membership clubs to 
     consumers as they were in the process of completing their 
     initial transactions on hundreds of websites. These third 
     party ``post-transaction'' offers were designed to make 
     consumers think the offers were part of the initial purchase, 
     rather than a new transaction with a new seller.
       (6) Third party sellers charged millions of consumers for 
     membership clubs without ever obtaining consumers' billing 
     information, including their credit or debit card 
     information, directly from the consumers. Because third party 
     sellers acquired consumers' billing information from the 
     initial merchant through ``data pass'', millions of consumers 
     were unaware they had been enrolled in membership clubs.
       (7) The use of a ``data pass'' process defied consumers' 
     expectations that they could only be charged for a good or a 
     service if they submitted their billing information, 
     including their complete credit or debit card numbers.
       (8) Third party sellers used a free trial period to enroll 
     members, after which they periodically charged consumers 
     until consumers affirmatively canceled the memberships. This 
     use of ``free-to-pay conversion'' and ``negative option'' 
     sales took advantage of consumers' expectations that they 
     would have an opportunity to accept or reject the membership 
     club offer at the end of the trial period.

     SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DECEPTIVE 
                   INTERNET SALES PRACTICES.

       (a) Requirements for Certain Internet-Based Sales.--It 
     shall be unlawful for any post-transaction third party seller 
     to charge or attempt to charge any consumer's credit card, 
     debit card, bank account, or other financial account for any 
     good or service sold in a transaction effected on the 
     Internet, unless--
       (1) before obtaining the consumer's billing information, 
     the post-transaction third party seller has clearly and 
     conspicuously disclosed to the consumer all material terms of 
     the transaction, including--
       (A) a description of the goods or services being offered;
       (B) the fact that the post-transaction third party seller 
     is not affiliated with the initial merchant, which may 
     include disclosure of the name of the post-transaction third 
     party in a manner that clearly differentiates the post-
     transaction third party seller from the initial merchant; and
       (C) the cost of such goods or services; and
       (2) the post-transaction third party seller has received 
     the express informed consent for the charge from the consumer 
     whose credit card, debit card, bank account, or other 
     financial account will be charged by--
       (A) obtaining from the consumer--
       (i) the full account number of the account to be charged; 
     and
       (ii) the consumer's name and address and a means to contact 
     the consumer; and
       (B) requiring the consumer to perform an additional 
     affirmative action, such as clicking on a confirmation button 
     or checking a box that indicates the consumer's consent to be 
     charged the amount disclosed.
       (b) Prohibition on Data-Pass Used To Facilitate Certain 
     Deceptive Internet Sales Transactions.--It shall be unlawful 
     for an initial merchant to disclose a credit card, debit 
     card, bank account, or other financial account number, or to 
     disclose other billing information that is used to charge a 
     customer of the initial merchant, to any post-transaction 
     third party seller for use in an Internet-based sale of any 
     goods or services from that post-transaction third party 
     seller.
       (c) Application with Other Law.--Nothing in this Act shall 
     be construed to supersede, modify, or otherwise affect the 
     requirements of the Electronic Funds Transfer Act (15 U.S.C. 
     1693 et seq.) or any regulation promulgated thereunder.
       (d) Definitions.--In this section:
       (1) Initial merchant.--The term ``initial merchant'' means 
     a person that has obtained a consumer's billing information 
     directly from the consumer through an Internet transaction 
     initiated by the consumer.
       (2) Post-transaction third party seller.--The term ``post-
     transaction third party seller'' means a person that--
       (A) sells, or offers for sale, any good or service on the 
     Internet;
       (B) solicits the purchase of such goods or services on the 
     Internet through an initial merchant after the consumer has 
     initiated a transaction with the initial merchant; and
       (C) is not--
       (i) the initial merchant;
       (ii) a subsidiary or corporate affiliate of the initial 
     merchant; or
       (iii) a successor of an entity described in clause (i) or 
     (ii).

     SEC. 4. NEGATIVE OPTION MARKETING ON THE INTERNET.

       It shall be unlawful for any person to charge or attempt to 
     charge any consumer for any goods or services sold in a 
     transaction effected on the Internet through a negative 
     option feature (as defined in the Federal Trade Commission's 
     Telemarketing Sales Rule in part 310 of title 16, Code of 
     Federal Regulations), unless the person--
       (1) provides text that clearly and conspicuously discloses 
     all material terms of the transaction before obtaining the 
     consumer's billing information;
       (2) obtains a consumer's express informed consent before 
     charging the consumer's credit card, debit card, bank 
     account, or other financial account for products or services 
     through such transaction; and
       (3) provides simple mechanisms for a consumer to stop 
     recurring charges from being placed on the consumer's credit 
     card, debit card, bank account, or other financial account.

     SEC. 5. ENFORCEMENT BY FEDERAL TRADE COMMISSION.

       (a) In General.--Violation of this Act or any regulation 
     prescribed under this Act shall be treated as a violation of 
     a rule under section 18 of the Federal Trade Commission Act 
     (15 U.S.C. 57a) regarding unfair or deceptive acts or 
     practices. The Federal Trade Commission shall enforce this 
     Act in the same manner, by the same means, and with the same 
     jurisdiction, powers, and duties as though all applicable 
     terms and provisions of the Federal Trade Commission Act (15 
     U.S.C. 41 et seq.) were incorporated into and made a part of 
     this Act.
       (b) Penalties.--Any person who violates this Act or any 
     regulation prescribed under this Act shall be subject to the 
     penalties and entitled to the privileges and immunities 
     provided in the Federal Trade Commission Act as though all 
     applicable terms and provisions of the Federal Trade 
     Commission Act were incorporated in and made part of this 
     Act.
       (c) Authority Preserved.--Nothing in this section shall be 
     construed to limit the authority of the Commission under any 
     other provision of law.

     SEC. 6. ENFORCEMENT BY STATE ATTORNEYS GENERAL.

       (a) Right of Action.--Except as provided in subsection (e), 
     the attorney general of a State, or other authorized State 
     officer, alleging a violation of this Act or any regulation 
     issued under this Act that affects or may affect such State 
     or its residents may bring an action on behalf of the 
     residents of the State in any United States district court 
     for the district in which the defendant is found, resides, or 
     transacts business, or wherever venue is proper under section 
     1391 of title 28, United States Code, to obtain appropriate 
     injunctive relief.
       (b) Notice to Commission Required.--A State shall provide 
     prior written notice to the Federal Trade Commission of any 
     civil action under subsection (a) together with a copy of its 
     complaint, except that if it is not feasible for the State to 
     provide such prior notice, the State shall provide such 
     notice immediately upon instituting such action.
       (c) Intervention by the commission.--The Commission may 
     intervene in such civil action and upon intervening--
       (1) be heard on all matters arising in such civil action; 
     and
       (2) file petitions for appeal of a decision in such civil 
     action.
       (d) Construction.--Nothing in this section shall be 
     construed--
       (1) to prevent the attorney general of a State, or other 
     authorized State officer, from exercising the powers 
     conferred on the attorney general, or other authorized State 
     officer, by the laws of such State; or

[[Page S8308]]

       (2) to prohibit the attorney general of a State, or other 
     authorized State officer, from proceeding in State or Federal 
     court on the basis of an alleged violation of any civil or 
     criminal statute of that State.
       (e) Limitation.--No separate suit shall be brought under 
     this section if, at the time the suit is brought, the same 
     alleged violation is the subject of a pending action by the 
     Federal Trade Commission or the United States under this Act.

                          ____________________