[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3386 Enrolled Bill (ENR)]
S.3386
One Hundred Eleventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the fifth day of January, two thousand and ten
An Act
To protect consumers from certain aggressive sales tactics on the
Internet.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
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'' 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 consumer's billing information, the
post-transaction third party seller has clearly and conspicuously
disclosed to the consumer 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) 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.
(d) 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) 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--
(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).
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
(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.
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.
(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.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.