Advertising Law Blog

The Restore Online Shoppers' Confidence Act ("ROSCA"), the product of the Senate Commerce Committee's investigation into online "data pass" and advanced consent (negative option) marketing is now in effect. The law, which can be found here, was signed by President Obama on December 29, 2010, governs both post-transaction offers by third-party sellers and online negative option offers.

ROSCA only applies to online transactions. Under the Act, an online merchant is now prohibited from providing customer billing information to a post-transaction third-party seller (i.e., a third-party upsell). Rather, now a third-party seller must obtain the full account number of the account to be charged, and a name and address of the consumer and a means to contact the consumer. Third-party sellers whose offers appear post-transaction must also obtain a consumer's express informed consent to be charged, including all material terms of the offer, a description of the products and services being offered and their cost, and the fact that seller is not affiliated with the initial merchant. In addition, the offer must require the consumer to affirmatively indicate consent to be charged a specific amount, such as clicking a confirmation button or checking a box that indicates the consumer's consent to be charged the amount disclosed.

Additionally, all online negative option offers are subject to the Act. However, those provisions are generally consistent with current industry standards - i.e., prohibiting charging a customer unless the merchant clearly and conspicuously discloses the material terms of the transaction before obtaining billing information, obtains express consent, and provides a simple mechanism for the consumer to stop future recurring charges. While the Act relates to online offers, the definition of negative option features comes from the FTC's Telemarketing Sales Rule.

The statute authorizes the FTC and state attorneys general to enforce the law and for the FTC to promulgate additional regulations. The law expressly provides that it does not modify the Electronic Funds Transfer Act or any regulation thereunder.

Given the scrutiny online offers are currently facing both by the FTC and private attorneys, marketers must carefully consider the requirements of this new law.