The FTC has strengthened its regulations on automatic renewals or “negative option plans,” which renew subscriptions unless the consumer explicitly cancels. The Restore Online Shoppers’ Confidence Act (ROSCA) requires businesses to disclose all material terms before obtaining billing information. Our team helps you comply with ROSCA and other automatic renewal laws by ensuring up-front disclosure, informed consent, and easy cancellation processes.

Here are the main requirements outlined by ROSCA:

Clear and Conspicuous Disclosure

• Material Terms: Online sellers must clearly disclose all material terms of a transaction before obtaining a consumer’s billing information. This includes the full cost, any recurring charges, and the terms of any trial period.
• Third-Party Charges: If a transaction involves a third-party, all terms related to these charges must be transparently disclosed to the consumer.

Informed Consent

• Express Informed Consent: ROSCA mandates that online sellers obtain express informed consent from consumers before charging them. This means that the consent must be based on a clear understanding of the terms previously disclosed.
• Separate Consent for Additional Charges: Sellers are required to obtain a separate consent for any additional charges, ensuring that consumers are aware of all costs associated with their purchase.

Prohibition of Data Pass

• No Data Pass to Third Parties: The act prohibits the transfer of a consumer’s credit card and other billing information to third-party sellers without the consumer’s explicit consent. This prevents unauthorized charges and reduces the risk of fraud.

Consumer Right to Cancel

• Easy Cancellation Procedures: Online sellers must provide simple and straightforward mechanisms for consumers to stop recurring charges or cancel the services.

In addition to ROSCA, many states have adopted their own requirements around automatic renewals. Marashlian & Donahue can help your business navigate through state level regulations and requirements as well.