The FTC announced today that it obtained a court order barring the two remaining defendants in a group of marketers from engaging in deceptive marketing and billing tactics.
The original complaint from 2015 alleged that defendants deceptively offered free trials of their products under a variety of brand names including "Aura Vie," "Dellure," "LeOR Skincare," and "Miracle Face Kit." Specifically, the Complaint alleges, the defendants offered "risk-free" trials through online banners, pop-up ads and affiliate websites. They required consumers who accepted the "risk-free" trials to provide their credit or debit card billing information, purportedly to pay nominal shipping and handling fees. However, within a few days of receiving consumers' billing information, Defendants charged consumers the full cost of the products, imposing charges of nearly $100. Defendants also allegedly refused to provide refunds for product returns unless consumers met onerous conditions that were not adequately disclosed. Additionally, after charging consumers, Defendants allegedly enrolled consumers in negative option continuity plans, charging consumers on a monthly basis.
All this, plus they purportedly and falsely represented that their business was accredited by the Better Business Bureau with an "A-" rating.
The result: an expensive judgment, a permanent injunction and years of record keeping and compliance reporting to the FTC.
This action, though describing practices that legitimate marketers are not likely to employ, offers insights into marketing techniques that can spell trouble to a regulator: placing important disclosures in hard-to-read places; inadequately disclosing the terms of a free trial or continuity program (see my earlier blog post with More Details about such programs); failing to get consumers' consent to reoccurring charges; and making it difficult for consumers to return products or reach customer service reps.
The court order announced today bars Argaman and Secured Merchants from engaging in deceptive practices in connection with the promotion or sale of any good or service, including failing to disclose clearly and conspicuously material terms of offers, failing to obtain a consumer’s express informed consent before submitting billing information for payment, and violating FTC’s Telemarketing Sales Rule (TSR).