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Federal Trade Commission and Free Trial Offers

By January 8, 2010June 16th, 2013Internet Lawyer

The U.S. Federal Trade Commission (FTC) is working with Visa and the Better Business Bureau to make consumers aware of deceptive billing practices involving free trial offers. Many Internet marketers selling continuity programs (such as monthly newsletters or memberships) cross the line into unethical or illegal marketing practices that involve free or low cost trial offers. Typically the trial period lasts 14 to 30 days and the consumer is automatically billed after that time unless cancellation occurs.

Some marketers hide the free trial in the sales content with vague language or have the box for the free trial already pre-checked. They hope the Federal Trade Commission doesn’t find out what they’re doing.

In one particularly bad instance in 2009, I saw a marketer use multiple trial offers and hid the last one on the order page below where the credit card info was entered. Unless the client scrolled down and unchecked a box, the continuity trial period kicked in when the order for the main product was made. Another well-known marketer hid his continuity programs terms in the legalese on another page and didn’t even mention it in the sales letter. And of course, there are some unethical Internet marketers who make it impossible to cancel during the trial period because the contact information is wrong (nonexistent phone numbers, e-mails that bounce, etc.).

As the FTC cracks down on deceptive marketing practices based on its guidelines that went into effect on December 1, 2009, Internet marketers should understand that the World Wide Web is being tamed. There are plenty of legal ways to make money online without resorting to deceptive free trial offers such as hidden continuity programs. A good continuity program should be able to stand on its own merits. If you can’t sell a continuity program as an independent product because it lacks value, don’t try to trick clients into paying for it through the use of a free or low cost trial period that results in unwanted continuity billings. This can get you into big trouble with the Federal Trade Commission.

Related Reading: FTC, Visa, and BBB Partner to Educate Consumers About Free Trial Offers and Online Scams

Mike Young, Esq.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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