Van Hollen, Clarke Introduce Bicameral Bill to Protect Consumers from Online Free Trial Scams

Today, U.S. Senator Chris Van Hollen (D-Md.) and Congresswoman Yvette D. Clarke (D-N.Y.-09) introduced new bicameral legislation to protect consumers from online free trial scams and deceptive marketing tactics. The lawmakers’ new bill – the Consumer Online Payment Transparency and Integrity Act, or Consumer OPT-IN Act – puts the onus on companies, instead of consumers, in renewing or extending contracts.

Too often, companies use free trial offers and unclear terms and conditions to trap consumers into subscriptions. From 2017-2019, the Better Business Bureau received 58,400 complaints related to free trials scams. Additionally, companies often use software and interfaces, called dark patterns that subtly trick users and make it harder for consumers to end these subscriptions and stop unwanted charges. To help prevent these practices, the Consumer OPT-IN Act would require companies to make a number of changes to better protect and inform consumers. 

“From fitness programs to music services, subscription-based companies have taken off. Unfortunately, the headaches that come with trying to cancel or get a refund on these subscriptions are just as prevalent. As far too many Americans know first-hand, the free-trials many companies offer often lead to a cumbersome, or near-impossible, process to opt-out. It’s time to take this burden off the American people. That’s why we’re introducing the Consumer OPT-IN Act to require companies to provide consumers their options clearly and transparently when it comes to a subscription. I look forward to working with Representative Clarke to enact these necessary and common-sense consumer protections,” said Senator Van Hollen.  

“I am proud to introduce this important legislation with Senator Van Hollen that will protect consumers and create greater levels of transparency and accountability when it comes to subscription-based services,” said Congresswoman Clarke. “All too frequently, subscription services are taking advantage of people, particularly our most vulnerable populations, and trapping them into paying for goods and services they never intended to sign up for. Enough is enough. Our legislation will put an end to these deceptive practices and protect consumers from being misled into endless monthly payments without their expressly given consent.”

The Consumer OPT-In Act will protect consumers from deceptive free trials and marketing tactics by:

·         Requiring companies to get express informed consent from consumers before converting free trials into automatically renewing contracts and charging consumers;

·         Requiring companies to notify consumers of the first automatic renewal and obtain express informed consent from consumers before automatically renewing long term contracts;

·         Requiring that companies offering contracts that automatically renew on a short term basis get express informed consent from consumers annually;

·         Requiring companies that have knowledge that a consumer isn’t using their products or service for 6 months to get the consumer’s express informed consent to continue billing, and allowing consumers to request a refund for the remaining portion of the contract;

·         Providing consumers with refunds when violations occur;

·         Giving the FTC rulemaking authority over negative option contracts, automatic renewals, and dark patterns.

The legislation is endorsed by: Public Citizen, National Consumer Law Center (on behalf of its low-income clients), US PIRG, the Consumer Federation of America, Fairplay, Truth in Advertising, the National Association of Consumer Advocates, the Center for Digital Democracy, the Center for Economic Justice, Consumer Action and the National Consumers League.

"The Van Hollen-Clarke bill stops unfair and deceptive auto-renewals and free-to-pay schemes designed to make online subscriptions harder to cancel than to sign up for. That's not right; it's wrong,” said Ed Mierzwinski, senior director for federal consumer programs, U.S. PIRG.

“Too many consumers are roped into recurring charges when they try something for free or hit with auto-renewals they didn’t expect. This legislation will ensure that consumers don’t have to deal with surprise changes to their credit cards or bank accounts,” said Susan Grant, Director of Consumer Protection and Privacy at Consumer Federation of America. 

“This legislation directly addresses unfair schemes used to automatically subscribe and renew charges on unwitting customers for products, online services, and even memberships that they may never use,” said Christine Hines, legislative director at the National Association of Consumer Advocates. “It provides commonsense protections that would ensure we are aware of, and actively consent to, automatic renewals and repeat purchases.”

“It’s unconscionable to use dark patterns to hook customers into long subscriptions and steep payments against their will, especially in the case of children and teens,” said David Monahan, Campaign Manager at Fairplay. “We applaud Senator Van Hollen and Congresswoman Clarke for standing up for consumers with this bill.”

“Too many companies engage in stealth marketing tactics online to get consumers to pay for services they may not want or use.   The public should not be subjected to unfair and deceptive practices that can threaten their financial well-being.  Sen. Chris Van Hollen and Rep. Clarke’s bill would create a safer consumer marketplace online, and give individuals powerful new ways to protect themselves,” said Jeff Chester, executive director, Center for Digital Democracy.  

“Sen. Van Hollen and Rep. Clarke’s bill provides critical consumer protection in a digital era to address the use of dark patterns, like negative options, by sellers of good and services to trick consumers into actions they don't want to take.  The bill promotes more competitive markets by empowering consumers to take the action they want,” said Birny Birnham of the Center for Economic Justice.

"Consumers should not be duped into automatic obligations for services that they did not agree to, only to enrich companies that mislead them into unwanted binding agreements,” said Linda Sherry, Consumer Action’s Director of National Priorities. “Consumers need Senator Van Hollen and Congresswoman Clarke’s solution that would require companies to get consumers’ express consent before committing them to contracts.”

"Negative options trick people into renewing automatic billing without their knowledge, and often for products or services that they do not even want or use. Sen. Van Hollen and Rep. Clarke’s bill will help restore transparency and fairness to online shopping,” said Lauren Saunders of the National Consumer Law Center. 

“NCL endorses Senator Van Hollen and Congresswoman Clarke’s bill to require free-to-pay conversions or negative option features requiring express affirmative consent before automatically renewing contracts or converting free-to pay contracts to automatically renewing contracts. Consumers need these protections because contracts for free goods or services that automatically convert to monthly payments carry often hefty charges and terms – giving fair warning to consumers of these contracts and the right to cancel is essential. Thanks to Senator Van Hollen for his leadership,” said John Breyault of the National Consumers League.