The Federal Trade Commission just settled a case against A1 Janitorial Supply Corp. and other defendants over claims that the companies charged their customers for "free" products that they provided. The FTC alleged that the defendants offered businesses free samples of products and then later billed them for the products -- and then kept doing it, even after the customers complained.
As part of the settlement, the defendants agreed not to ship companies unordered products unless they are clearly marked "free" and not to charge companies for them. The defendants also agreed to pay $2.7 million, which the FTC plans to use to give refunds to defrauded customers.
The FTC's "Guide Concerning Use of the Word 'Free' and Similar Representations" gives detailed guidance about advertising "free" products. What are some of the issues that the defendants should have kept in mind here? The FTC cautions that free offers "must be made with extreme care so as to avoid any possibility that consumers will be misled or deceived." The FTC also says that, "all the terms, conditions and obligations upon which receipt and retention of the 'Free' item are contingent should be set forth clearly and conspicuously at the outset of the offer so as to leave no reasonable probability that the terms of the offer might be misunderstood."
"The defendants tricked small businesses into paying for products they didn’t order and free samples that weren’t free" -- Andrew Smith, Director, FTC Bureau of Consumer Protection