Sen. Rockefeller Introduces Bill to Regulate Aggressive Sales Tactics on Internet

May 19, 2010. Sen. John Rockefeller (D-WV), the Chairman of the Senate Commerce Committee (SCC), introduced S 3386 [LOC | WW], the "Restore Online Shoppers' Confidence Act".

In addition, the SCC released report [25 pages in PDF] prepared by the majority staff of the SCC titled "Supplemental Report on Aggressive Sales Tactics on the Internet".

This bill recites in its findings that "the aggressive sales tactics many companies use against their online customers have undermined consumer confidence in the Internet".

It elaborates 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."

Sen. Rockefeller (at right) stated in a release that Affinion, Vertrue, and Webloyalty are the companies that used aggressive sales tactics to enroll online consumers in services without their consent.

He stated that "Tricking consumers into buying goods and services they do not want is completely unacceptable.  It’s not ethical, it’s not right, and it is not the way business should be done in America."

The bill provides that "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 ... 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 ... and ... 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 ... obtaining from the consumer ... the full account number of the account to be charged".

The bill further provides that "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".

The bill also provides that "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" the seller has met numerous requirements enumerated in the bill regarding disclosure, consent, and termination.

The bill would give the Federal Trade Commission (FTC) authority to write rules, pursuant to Administrative Procedure Act (APA) procedure. The FTC would also be given authority to enforce violations as unfair or deceptive acts or practices. The bill would also give enforcement authority to state attorneys general.

The original cosponsors of the bill are Sen. Mark Pryor (D-AR), Sen. Bill Nelson (D-FL), Sen. Amy Klobuchar (D-MN), Sen. Claire McCaskill (D-MO), and Sen. George LeMieux (R-FL). The bill was referred to the SCC.