California Expands on new federal internet marketing law
shoemoney
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3 min read
California, seeing blood in the water once again has entered the fray by recently enacting one of the toughest laws in the nation on negative option, or “continuity,” marketing, which is mostly the free+shipping or trial offers you see.
A while back you probably remember the new Online Restore Shoppers’ Confidence Act (also known as “Rockefeller,” after its sponsor, Sen. Jay Rockefeller, D-WV) now requires disclosure of Internet continuity offer terms before the seller obtains consumer billing information.
The Federal Trade Commission also is continuing to crack down on negative options, most recently in its big Internet marketing case against iWorks.
Now, California has joined the act, and raised the ante, by enacting Business and Professions Code §§17600-17606, which gets quite a bit more specific.
The new California law requires marketers to:
- Clearly and conspicuously disclose the terms of negative options, either in "larger type than the surrounding text," or, if the same size as surrounding text, then in "contrasting type, font, or color" or "set off" by markings, "in a manner that clearly calls attention to the language." This minimum mandate of "equal or greater size" is more precise and inflexible than the FTC's "clear and conspicuous" standard.
- Obtain the consumer's advance affirmative consent for future recurring charges.
- Provide a written acknowledgement of the negative option that includes the offer terms, cancellation policy and cancellation method.
- In the case of a free-trial offer, disclose and honor the cancellation policy.
- Provide a toll-free telephone number, E-mail address, postal address (when the seller directly bills the consumer), or another easy and timely cancellation method.
- Notify consumers of any material changes to the negative option terms prior to their implementation.