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Lawyers Run The WorldROSCA Compliance: 10 Things All Marketers Must Know

ROSCA Compliance: 10 Things All Marketers Must Know


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While many surmised that the new administration might bring with it less stringent regulatory scrutiny, the Federal Trade Commission is showing no signs of taking its foot off the gas when it comes to enforcing the Restore Online Shoppers’ Confidence Act. In fact, the FTC continues to expand its enforcement of ROSCA into numerous industries and aggressively pursue negative option marketers that fail to adequately disclose material terms of “risk free” trial offers, automatic subscription renewals and continuity plans.


To comply with ROSCA, marketers must, without limitation, clearly and conspicuously disclose all material terms, conditions, restrictions, limitations and exclusions.

Clear and conspicuous disclosures should be on the same website offer page or other electronic page, in close proximity to the triggering representation and be viewable without requiring the consumer to scroll up, down or sideways, or otherwise adjust their browser or devise window in any way. Hyperlinks and pop-ups should be avoided, if possible.

Generally speaking, to qualify as “clear and conspicuous” a disclosure must be in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language.

In the case of an audio disclosure, “clear and conspicuous” means in a volume and cadence sufficient to be readily audible and understandable.

Always ensure compliance with FTC Dot Com Disclosure guidance.


Marketers must clearly and conspicuously disclose the following:

  • All material terms, conditions, restrictions, limitations and exclusions applicable to the purchase or use of the product/service that is the subject of the offer. The foregoing includes whether a product/service is, in fact, free, a bonus or a gift;
  • A description of the product/service being offered and related costs. Shipping and handling or processing fees should always be disclosed;
  • The purposes for which personally identifiable information will be used, including payment information and partials;
  • The timing/manner of any charge or bill, including, but not limited to, the automatic and continuous nature of charges, the dates/frequency of the charges, the amount of each charge, and whether charges will be credit charges or via checking account debit;
  • The duration of any trial period before the consumer is charged or billed, and when the “trial period” begins;
  • How the charge will appear on the consumer’s billing statements (e.g., name of the entity on whose behalf the payment will be assessed);
  • That the consumer is agreeing to purchase a product, program or service (as part of the post-transaction written confirmation, that a transaction “has been” authorized by the consumer);
  • That the consumer will not be charged or billed without authorization; and
  • The material terms and conditions of any policies and practices regarding cancellations and refunds, including steps the consumer must take to cancel, stop recurring charges and, if applicable, obtain a refund.


Marketers must present disclosures prior to the entry of payment information, consent to pay or completion of the order.


Marketers must obtain express informed consent before charging consumers.

Express informed consent can be obtained by obtaining affirmative assent to all material terms and paying for the product/service using a specified account. The consumer should indicate assent by clicking a button that is specifically labeled to convey such assent, or other substantially similar method.

For written offers (e.g., online), informed consent should consist of a check box, signature or other substantially similar method, that the consumer must affirmatively select or sign to accept the negative option feature. Immediately adjacent to such check box, signature or substantially similar method, marketers should disclose, without limitation, all costs associated with the negative option feature, that the consumer is agreeing to pay such costs, the length of any trial period, and that the consumer must cancel to avoid being charged. This disclosure should be clear and conspicuous in relation to any other information provided on the page related to costs, risks or obligations associated with any negative option feature, including terms such as “free,” “discounted,” “no risk,” etc.


Express informed consent can also be obtained verbally.

For verbal offers, a lawful recording of the transaction (e.g., sales representations) evidencing the consumer’s agreement to the negative option feature (e.g., authorization of payment, name/date of authorization, understanding of what account will be charged and receipt of required material disclosures).

The recording must demonstrate that the consumer has provided billing information, such as the last four (4) digits of the account to be charged, specifically for the purpose of participating in the negative option feature and that the marketer has disclosed to the consumer, without limitation, all costs associated with the negative option feature, that the consumer is agreeing to pay such costs, the length of any trial period, and that the consumer must cancel to avoid being charged.

Lawful recordings and all associated sales representations should be maintained. Recordings should be retrievable by consumer name, telephone number or billing information and must be provided to a consumer, upon request.


The Telemarketing Sales Rule prohibits sellers and telemarketers from misrepresenting any material aspect of a negative option feature of an offer.

The TSR prohibits sellers and telemarketers from misrepresenting any material aspect of a negative option feature of an offer, including: (i) the fact that the consumer’s account will be charged unless the consumer takes an affirmative action to avoid the charges; and (ii) the dates the charges will be submitted for payment, and the specific steps the customer must take to avoid the charges.

For example, the TSR prohibits marketers from representing that to avoid being charged, the consumer need only call a toll-free number to cancel if, in fact, the number is never answered. In this case, a marketer would be misrepresenting the specific steps the customer must take to avoid the charge, because the steps described would not achieve that purpose.


Marketers should provide consumers with timely, written confirmation of transaction details, material terms and payment authorization.

For products delivered by mail, marketers should send written confirmation of the transaction with the first shipment that includes required material disclosures, and a clear and conspicuous statement of the procedures by which the consumer can cancel or obtain a refund.

Consult with an experienced advertising lawyer for details regarding specific confirmation obligations and authorization requirements that govern preauthorized, recurring payments.


A marketer must provide a “simple mechanism” for the consumer to stop recurring charges. Failing to provide a no-cost mechanism for cancellation that is as simple to use and as effective as the mechanism by which the consumer purchases or enrolls in a marketer’s program is prohibited.

In addition, a marketer must not misrepresent any material term of the applicable refund or cancellation policy. In fact, such policies should be disclosed, clearly and conspicuously, before the consumer consents to pay for a negative option feature. If the policy is not to make refunds or allow cancellations, it must be conspicuously disclosed.

A marketer cannot fail to promptly honor a request that complies with any policy to make refunds or allow cancellations. Nor may a marketer fail to terminate the consumer’s enrollment in any plan or program with a negative option feature prior to the next billing cycle, provided that the consumer makes the request prior to the next billing cycle.

In the event a marketer cannot cancel the consumer’s enrollment prior the next billing cycle, the consumer should be refunded the amount charged within the next billing cycle.

Cancellation mechanisms should be clearly and conspicuously disclosed on all websites and direct customer communications.

Toll-free telephone numbers should be included in billing descriptors for recurring charges. Marketers should also maintain a call center that is open seven days a week.

Marketers should accept consumer cancellation requests immediately. A marketer may reasonably attempt to retainer the consumer. However, if at any time during the retention effort the consumer expresses a desire that such efforts cease, the marketer must promptly honor the request.


A number of states have enacted negative option laws. Perhaps the most stringent is California’s legislation that regulates “automatic renewals” and “continuous services.”

Pursuant to California Business & Professions Code §17600, et seq., an offer that includes an automatic renewal provision must include a clear and conspicuous disclosure: (i) that the subscription will continue until the customer terminates the contract; (ii) of the cancellation policy of the offer; (iii) of the amount of the recurring charges that the consumer’s credit card will be charged and if the amount will change, and if so, the amount that the charge will be changed by, if known; (iv) of the duration of the automatic renewal term or that the subscription is continuous; and (v) regarding whether there is any minimum purchase requirement.

To charge a consumer on a continuing basis, a marketer must obtain the consumer’s affirmative consent to the agreement containing the automatic renewal/continuing service offer terms.

In addition to obtaining affirmative consent to all material terms from the consumer, the California statute expressly requires that the consumer be provided with an acknowledgment that includes the automatic renewal or continuous service offer terms, cancellation policy and information regarding how to cancel in a manner that is capable of being retained by the consumer.

If the offer includes a free trial, the business shall also disclose in the acknowledgment how to cancel and allow the consumer to cancel before the consumer pays for the goods or services.


It is critically important that marketers who rely upon advance consent for negative option offers closely monitor FTC ROSCA investigations and enforcement actions. In conjunction with the foregoing, marketers should deliberately review programs, websites, scripts, payment portals and website agreements in order to ensure that they comply with ROSCA and applicable state legislation.

The more marketers do to conspicuously disclose automatic renewal offer and cancellation terms on the order screen, and in a post-transaction acknowledgement, the less likely consumers are to file complaints that draw the attention of local, state and federal regulators.

This article should be of interest to any company or individual engaging in Internet marketing or online lead generation, including corporate counsel. Please contact the author if you are interested in discussing the design and implementation of preventative compliance controls that effectively walk the line between commerce and compliance, or if you are the subject of an advertising related investigation or enforcement action.

Follow the author on Twitter at FTC advertising compliance and defense lawyer.


ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

Richard B. Newman
Richard B. Newman
Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

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