Congressional Record, Volume 156 Issue 154 (Tuesday, November 30, 2010)

[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.

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

SEC. 4. NEGATIVE OPTION MARKETING ON THE INTERNET.

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.

[[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.

____________________