Black Friday tip: make sure your subscription offers comply with the Restore Online Shoppers’ Confidence Act (ROSCA).
The FTC recently issued a statement warning the ecommerce industry that it plans to “ramp up” enforcement related to subscription programs that automatically renew.
The statement focused on three issues: consent, disclosure, and cancellation.
Consent:
The FTC says that marketers need “affirmative, informed consent” before charging customers for an automatic renewal or “negative option” program.
Affirmative informed consent means accepting the terms of a subscription “separately from any other portion of the entire transaction,” and the FTC specifically reiterated that pre-checked boxes don’t cut it.
Disclosure:
All of the terms of a subscription offer (e.g., initial payment, recurring costs, deadline to cancel, how to cancel) need to be “clearly and conspicuously disclosed” in simple language.
That means no hiding terms behind links or requiring customers to hover their mouses over anything on a site to see the terms.
Cancellation:
You need to give customers a simple mechanism to cancel through the method they used to sign up (e.g., signing up through an app means cancellation option through the app).
The FTC said marketers should not attempt to stop the cancellation by forcing customers to click through new offers or other barriers.
We are going to see more enforcement from this new FTC regime—they have explicitly promised it.
Now’s a great time to check over your practices to make sure you’re limiting risk.
Last week, the FTC sent more than 700 warning letters, each called a “Notice of Penalty Offense,” to brands and agencies around the country.
The letters list a series of marketing practices that the FTC has determined to be deceptive, including:
-Falsely claiming an endorsement (e.g., “used by Clint Eastwood” if that’s not true)
-Misrepresenting an endorser recently (or ever) used the product
-Using an endorsement to make deceptive performance claims (e.g., “I lost 150lb in a week”)
-Misrepresenting that a review or endorsement represents the actual experience or opinion of a user (e.g., giving reviewers a script that doesn’t match their honest belief)
-Misrepresenting that a review or endorsement reflects the typical user experience, and
-Failing to disclose a material connection with an endorser.
That last one is most relevant to influencer marketing.
The FTC requires disclosure of “material connections” between someone endorsing a product or service (like an influencer) and the business itself.
The idea is that a consumer might give less weight to a product review if they knew the brand was compensating the reviewer, so it’s a deceptive practice to hide the relationship from people making purchasing decisions based in part on the reviews.
This is why we have things like “# ad,” though that’s not the only way to disclose the connection.
While these FTC letters don’t accuse the brands and agencies of wrongdoing, they have the effect of giving notice that violations can result in penalties of up to $43,792 PER VIOLATION.
It’s been about a year and a half since we saw an FTC enforcement action targeting influencer disclosure issues.
These 700+ letters, and the FTC’s 5-0 vote to authorize them, show that these issues are back in the spotlight.
Now is a great time to take a look at your campaign compliance.