By: Linda L. Goodman
For 15 Companies and seven individuals that marketed and sold AuraVie, Dellure, LéOR Skincare, and Miracle Face Kit brand products, they will find that, a California Federal District Court issued a temporary restraining orderon June 15th against the defendants halting their “deceptive” marketing practices, freezing their assets, (including company and personal bank accounts) and appointed a receiver over their business all without notice or the opportunity to be heard before the court issued the order.
The sin these 15 companies and 7 individuals committed, which caused the full force of the Federal Trade Commission to come down on them, is as old as the first negative option marketing that appeared 10 years ago with the Acia berry fad – they used a red flag marketing term “risk free trial” and backed that up with a failure to post the offer terms clearly and conspicuously before the payment registration box. In fact, they did everything they could to hide the offer terms including misrepresenting themselves as accredited by the Better Business Bureau with an “A-” rating. In fact, the company is not accredited and has a BBB rating of “F.”
According to the FTC’s complaint, since at least 2010, the defendants have marketed and sold the skincare products on a variety of websites, such as aurviefreetrial.com, auraviewtrialkit.com, and mymiraclekit.com. The defendants use pop-up advertisements, banner ads, commercial email and advertising space on third-party websites, including Amazon.com, Huffingtonpost.com, and Lowes.com, to tout “risk free trial” offers to direct consumers to their websites. Once there, the consumer was instructed to provide their credit or debit card information to pay shipping fees of $4.95 or less to receive the risk free trial offer.
Consumers who provide their credit card information for shipping, discovered 10 days later that they have been charged much more – typically $97.88 – under terms hidden in fine print on the defendants’ websites and buried in click through terms of service. Thus, consumers were enrolled without their consent in subscription plans under which they are shipped more products and charged recurring fees.
But to really draw the attention of the Federal Trade Commission, defendants then made it incredibly difficult to cancel the memberships, stop or avoid the charges, or obtain a refund and topped it off by charging a $15.00 restocking fee. And they made all these charges on bank accounts and credit cards without any proof of consent for the charges by the consumers.
Thus, it is no wonder the FTC charged the defendants with violating Article 5 of the FTC Act, the Restore Online Shoppers’ Confidence Act (“ROSCA”), and the Electronic Funds Transfer Act (“EFTA”). In filing the complaint, the FTC is seeking a court order permanently barring the defendants from the allegedly illegal conduct and refunds for defrauded consumers. This order will haunt these defendants for 20 or more years.
A simple 5 point compliance program for this marketing would have prevented this order: (1) Don’t use the term “Free” unless there is absolutely no charge for the product; (2) Don’t Tout credentials (BBB rating) if you don’t have it; (3) Put the negative option terms on the left side of the payment registration page above or adjacent to the registration box in at least 14 pt. font and label it “Trial Offer Terms”; (4) Above the submit button put hyper-links to your Terms of Service, Privacy Policy and an authorization to charge the payment source after the trial period; and (5) Don’t make it difficult to get a refund and don’t charge the consumer to give the refund.
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This article is a publication of The Goodman Law Firm and is intended to provide information on recent legal developments. This article does not create an attorney-client relationship, nor should it be construed as legal advice or an opinion on specific situations. This may constitute “Attorney Advertising” under the Rules of Professional Conduct and under the law of other jurisdictions.
© 2015 TGLF, A.P.C.