Boston-based supplement marketer NutraClick LLC and its two officers have agreed to pay $1.04 million and be banned from negative option marketing in order to settle Federal Trade Commission allegations that the company’s deceptive sales and billing practices violated federal law and a 2016 federal court order from a prior FTC case.
According to the FTC’s complaint and proposed contempt order, NutraClick and the other defendants violated the Restore Online Shoppers’ Confidence Act, the FTC’s Telemarketing Sales Rule, and the previous court order, by failing to clearly and conspicuously disclose all material terms of their negative option sales offers, despite agreeing to do so in the 2016 order.
The $1.04 million that the defendants will pay under the settlement represents 100 percent of the consumer harm they caused, as well as the total revenue made through their allegedly deceptive conduct. The FTC may use it to provide refunds to consumers billed by NutraClick on the last day of the trial period.
“Hiding the true deadline for canceling a free trial offer isn’t just bad business – it’s illegal,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “And that’s why NutraClick will be permanently banned from using negative options in the future.”
In 2016, NutraClick agreed to settle the FTC’s complaint alleging that it did not clearly disclose that people who ordered samples of supplements and beauty products would be enrolled in a membership program and billed from $29.99 to $79.99 monthly unless they canceled within an 18-day trial period. At least 70,000 people filed complaints about the operation. The company netted tens of millions of dollars from the unauthorized recurring charges, the FTC contended.
The Commission vote authorizing the staff to file the current complaint and proposed orders was 2-1-2, with Commissioner Rohit Chopra voting no, and Commissioners Rebecca Kelly Slaughter and Christine S. Wilson not participating. The complaint and proposed orders were filed in the U.S. District Court for Central District of California.
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