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New Fed Law Internet Billing

by swapsell
14 replies
Bill Summary & Status
111th Congress (2009 - 2010)
S.3386
All Information

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President Obama signed Dec 29th 2010 the new internet billing law.....

It reads:
SUMMARY AS OF:
8/2/2010--Reported to Senate amended. (There is 1 other summary)

Restore Online Shoppers' Confidence Act - Defines "post-transaction third party seller" as a person that: (1) sells, or offers for sale, any good or service on the Internet; (2) solicits purchases on the Internet through an initial merchant after the consumer has initiated a transaction with the initial merchant; and (3) is not a subsidiary or corporate affiliate of the initial merchant.

Makes it unlawful for any post-transaction third party seller to charge or attempt to charge any consumer's credit card, debit card, bank account, or other such financial account in an Internet-based transaction, unless: (1) before obtaining the purchaser's billing information, the seller has disclosed all material terms, including the fact that the such seller is not affiliated with the initial merchant, and a description and the cost of the offered goods or services; and (2) the seller has received the express informed consent.

Makes it unlawful for an initial merchant to disclose such financial account number or other billing information to any post-transaction third party Internet seller (sometimes referred to as a data-pass).

Makes it unlawful, subject to exception, for any person to charge or attempt to charge a consumer for goods or services sold in an Internet-based transaction through a negative option feature. Defines "negative option feature" as a provision under which the customer's failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.

Prohibits construing this Act to supersede or otherwise affect the Electronic Funds Transfer Act or any regulation thereunder.

Treats a violation of this Act or any regulation thereunder as an unfair or deceptive act or practice. Requires the Federal Trade Commission (FTC) to enforce this Act.

Authorizes the attorney general of a state to bring an action for injunctive relief in federal court on behalf of the state's residents.


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How will it affect rebilling clickbank offers and coaching programs?? Looking for feedback both good and bad!
#billing #fed #internet #law
  • Profile picture of the author indexphp
    that's what happens when rebill merchants do what they do (screw everything up)

    At the same time, the FTC doesnt enforce much though
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  • Profile picture of the author kindsvater
    This should not affect ClickBank rebills because a disclosure is already made pre-purchase, and there is a simple online form one can click at ClickBank to unilaterally cancel recurring charges.

    As for coaching programs, it depends. Here is the scenario the law is designed to prevent:

    IMer sells Consumer an eBook. The Consumer's billing info is passed to a third party coaching program and a pop-up appears asking if the Consumer wants part of the coaching program. Consumer says sure, and is then shocked when a $1497 membership coaching charge appears on their credit card.

    Now, the automated data pass is essentially illegal. IMer should not disclose any of Consumer's financial information to another seller.
    "It shall be unlawful for an initial merchant to disclose a credit card, debit card, bank account, or other financial account number, or to disclose other billing information that is used to charge a customer of the initial merchant, to any post-transaction third party seller for use in an Internet-based sale of any goods or services from that post-transaction third party seller."
    Now, in our example, the third party coaching program must obtain from the consumer their billing information and have the consumer affirmatively click to charge their card.

    The third party coaching program must also disclose a description of their services, cost, and the fact they are not related to the initial merchant.
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  • Profile picture of the author swapsell
    In reading this paragraph:
    Makes it unlawful, subject to exception, for any person to charge or attempt to charge a consumer for goods or services sold in an Internet-based transaction through a negative option feature. Defines "negative option feature" as a provision under which the customer's failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.

    I think merchants will need to contact the customer monthly to make sure they know they are being billed and not rely on a customer to take affirmative action? Kind of dicey in that text!
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    • Profile picture of the author Joe118
      Originally Posted by swapsell View Post

      In reading this paragraph:
      Makes it unlawful, subject to exception, for any person to charge or attempt to charge a consumer for goods or services sold in an Internet-based transaction through a negative option feature. Defines "negative option feature" as a provision under which the customer's failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.

      I think merchants will need to contact the customer monthly to make sure they know they are being billed and not rely on a customer to take affirmative action? Kind of dicey in that text!
      Not if they positively agree at the time the agreement is made. So recurring charges through paypal and CB are OK.
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  • Profile picture of the author CDarklock
    Let me explain in plain English what this means, although it is not legal advice and I am not an attorney.

    You go to Alice's website and click "Buy Now" on her product.

    On the payment page, there is a checkbox that says "Add this other product too" where that product belongs to Bob.

    When you click "pay now," you are charged not only for Alice's product but also for Bob's.

    This law basically says:

    - The checkbox cannot be automatically selected

    - The payment page must disclose that the other product is Bob's product, not Alice's

    - The total must reflect the cost of Bob's product before the customer approves the payment

    - Any future or recurring charges for Bob's product must be identified

    - Alice cannot give any of your financial data to Bob

    This law also applies to one-click upsells. You can upsell your own products all you want with a one-click upsell. Upselling someone else's product falls into the same restrictions as the above.
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    • Profile picture of the author gabbydeb
      Thank you for making this clear! I needed that. LOL


      Originally Posted by CDarklock View Post

      Let me explain in plain English what this means, although it is not legal advice and I am not an attorney.

      You go to Alice's website and click "Buy Now" on her product.

      On the payment page, there is a checkbox that says "Add this other product too" where that product belongs to Bob.

      When you click "pay now," you are charged not only for Alice's product but also for Bob's.

      This law basically says:

      - The checkbox cannot be automatically selected

      - The payment page must disclose that the other product is Bob's product, not Alice's

      - The total must reflect the cost of Bob's product before the customer approves the payment

      - Any future or recurring charges for Bob's product must be identified

      - Alice cannot give any of your financial data to Bob

      This law also applies to one-click upsells. You can upsell your own products all you want with a one-click upsell. Upselling someone else's product falls into the same restrictions as the above.
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    • Profile picture of the author entry
      Originally Posted by CDarklock View Post

      Let me explain in plain English what this means, although it is not legal advice and I am not an attorney.

      You go to Alice's website and click "Buy Now" on her product.

      On the payment page, there is a checkbox that says "Add this other product too" where that product belongs to Bob.

      When you click "pay now," you are charged not only for Alice's product but also for Bob's.

      This law basically says:

      - The checkbox cannot be automatically selected

      - The payment page must disclose that the other product is Bob's product, not Alice's

      - The total must reflect the cost of Bob's product before the customer approves the payment

      - Any future or recurring charges for Bob's product must be identified

      - Alice cannot give any of your financial data to Bob

      This law also applies to one-click upsells. You can upsell your own products all you want with a one-click upsell. Upselling someone else's product falls into the same restrictions as the above.
      Cheers for clearing this up.

      What changes must we make to how we upsell now, compared to before?

      any major main changes in our upsell strategies?
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      • Profile picture of the author CDarklock
        Originally Posted by entry View Post

        What changes must we make to how we upsell now, compared to before?
        I don't know how you upsell now.

        I upsell before payment, only upsell my own products, require the prospect to explicitly confirm that he wants the upsell, and don't collect any financial data at all - let alone relay it to a third party.

        So I don't have to do squat.

        It's funny the way that works out. If you're being fair and honest and ethical with your customers, new consumer protection laws rarely affect you.
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        "The Golden Town is the Golden Town no longer. They have sold their pillars for brass and their temples for money, they have made coins out of their golden doors. It is become a dark town full of trouble, there is no ease in its streets, beauty has left it and the old songs are gone." - Lord Dunsany, The Messengers
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        • Profile picture of the author entry
          Originally Posted by CDarklock View Post

          It's funny the way that works out. If you're being fair and honest and ethical with your customers, new consumer protection laws rarely affect you.

          Hey, what you trying to say ?

          lol :p
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          • Profile picture of the author CDarklock
            Originally Posted by entry View Post

            Hey, what you trying to say ?
            That if you're already being fair and honest and ethical, you probably don't have to change anything.
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            "The Golden Town is the Golden Town no longer. They have sold their pillars for brass and their temples for money, they have made coins out of their golden doors. It is become a dark town full of trouble, there is no ease in its streets, beauty has left it and the old songs are gone." - Lord Dunsany, The Messengers
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            • Profile picture of the author AEC
              I like that statement. A lot of times I see a law change and it only affects the people working on the edge. The marketers that are treating others like they want to be treated are fine... Most of the time
              Originally Posted by CDarklock View Post

              That if you're already being fair and honest and ethical, you probably don't have to change anything.
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              If you place good service ahead of making money... opportunities to make money will present themselves.
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              • Profile picture of the author Robert Colle
                Well that law seems rather very fair to me. I think it will only affects those IM who initially before the law really had some unethical practices and let's be honest all of us are consumers of this or that product and there are laws that protects us from the producers or sellers of the products we consume so it's simply fair if there is a law too that protects those who consume our own products.
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    • Profile picture of the author Sparhawke
      Originally Posted by CDarklock View Post

      Let me explain in plain English what this means, although it is not legal advice and I am not an attorney.
      We should get John Berryhill in here to explain to us...lawyer speak like this confuses the hell out of me lol

      Question, isn't this quite old by now? *Ah, signed a few days ago *
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      • Profile picture of the author CDarklock
        Originally Posted by Sparhawke View Post

        Question, isn't this quite old by now?
        Obama just signed it last week.
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        "The Golden Town is the Golden Town no longer. They have sold their pillars for brass and their temples for money, they have made coins out of their golden doors. It is become a dark town full of trouble, there is no ease in its streets, beauty has left it and the old songs are gone." - Lord Dunsany, The Messengers
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