Online marketer of bogus free trials to pay $359M in FTC settlement order
Feb 23, 2012
The Federal Trade Commission and several individuals have reached a settlement order of $359 million for charges of online marketing fraud. Most of the defendants were located in Alberta; the FTC worked with the Canada Competition Bureau and the Alberta Partnership Against Cross-Border Fraud in its investigation.
Jesse Willms had run a scheme of bogus "free" trial offers for products like weight-loss pills, teeth whiteners, and free credit reports. Nearly four million consumers in the United States and other countries had signed up for what they believed were free trials, but they ended up being charged monthly in recurring fees.
In addition to the fine, the settlement permanently enjoins Jesse Willms and his companies from using "negative-option" marketing--a practice by which a consumer's silence or inactivity is construed as active permission to charge them.
Source: FTC Press Release
Related content: The Intersection of Consumer Protection and Competition in the New World of Privacy (Julie Brill, Federal Trade Commission)