The Federal Trade Commission has announced a settlement agreement with the operators of an Internet scheme that used bogus "free" product offers in order to deceive consumers by charging them for products and services they did not want or agree to purchase.
The 10 companies — all owned by the same person — targeted by the FTC complaint had been offering "free trials" for various products online, including acai berry weight-loss pills, teeth whiteners, and health supplements containing resveratrol, work-at-home schemes, access to government grants, free credit reports, and penny auctions.
Customers were required to give their credit card numbers to pay for small fees for shipping and handling, and also promised phony "bonus" offers just for signing up.
As a result, many of them ended up with recurring $79.95 fees. The sites claimed to offer money-back guarantees but the FTC found that customers had to jump through several hoops just to get any sort of refund, if they received one at all.
The settlement not only puts a stop to these businesses using "negative-option" marketing, wherein the seller interprets consumers' silence or inaction as permission to charge them, but the owner of these companies is ordered to repay $359 million.