Free-Trial and Negative Option Pitches are High on FTC Radar

In a series of recent actions by the FTC to target allegedly deceptive online “free-trial” offers that trick consumers into enrolling in negative option plans, the FTC announced another case against Gopalkrishna Pai and eight companies owned and operated by Pai. The complaint against Gopalkrishna Pai allege that the defendants acted as a common enterprise, advertised free trial products for a nominal shipping and handling fee but the defendants failed to disclose that consumers would be automatically charged full price for the products as well as monthly auto shipments, unless the order was cancelled within 14-15 days. The consumers had to click on the small “Terms and Conditions” hyperlink in the ads and then scrolling through a pop-up window could the consumers find the disclosure. The complaint further alleges that the defentants charged consumers more than $90 for the free trial and enrolled the consumers into an auto ship program that would cost over $90 a month. The defendants charged consumers without their consent for additional products, enrolled the consumers into additional auto ship programs relating to the initial free trial and used a confusing checkout process that led consumers to unintentionally signing up for products they did not want.