FTC Cracks Down on Deceptive Free-Trial Offers: What You Need to Know
In recent years, the Federal Trade Commission (“FTC”) has intensified its efforts to combat misleading online marketing tactics, particularly those involving "free-trial" offers that often trap consumers into negative option plans. A notable case was announced on February 28, 2019, targeting a Puerto Rico-based operation that allegedly deceived consumers into unwittingly signing up for costly subscriptions.
The complaint revealed that Gopalkrishna Pai and several companies he controls marketed skincare products online between February 2016 and August 2017. These products, including well-known names like Vita Luminance and Regenelift, were advertised as “free trial” offers, with consumers only needing to pay a small shipping fee—typically $4.99. The ads, laden with phrases like “Risk Free” and “Claim Your Free Trial,” lured many unsuspecting customers into a trap.
The catch? Consumers were not adequately informed that they would be automatically billed full price for the products after a brief trial period, and would be enrolled in monthly auto-shipments unless they canceled within a narrow window of 14 to 15 days. The FTC noted that this critical information was buried behind a small “Terms and Conditions” hyperlink, making it nearly impossible for consumers to find without extra effort.
As a result, many individuals who thought they were trying a product for free ended up facing charges exceeding $90, with monthly fees that followed. Moreover, the deceptive marketing didn’t stop there; some consumers reported being charged for additional products they hadn’t consented to and were enrolled in even more auto-ship programs.
The situation worsened when these consumers attempted to cancel their subscriptions. Many found it challenging to reach customer service representatives, and those who did often faced hurdles in successfully terminating their orders. Shockingly, some customers who returned unopened trial products still struggled to receive refunds or cancel their enrollments.
To conceal their activities, the defendants allegedly employed over 100 shell companies, creating a web of fake and real websites to process payments. This strategy not only helped them avoid detection by credit card companies but also allowed them to rake in tens of millions of dollars through deceptive practices.
This FTC action serves as a stark reminder for consumers to remain vigilant when encountering online offers that seem too good to be true. Always read the fine print and be wary of any commitments that could lead to unexpected charges. If you find yourself caught in a similar situation, know that you have the right to challenge these practices and seek assistance in resolving such disputes. Stay informed and protect yourself from deceptive marketing schemes!
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