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S.3386 

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AT THE S E COND SESSION 

B egun am/ he/11at1h<> City "f 1Vashi11gton on Tue•<lay, 

the fifth. <lay of)muwry. uco thousand and 1e11 

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To protect. consumers from certain aggressive sales tactics on the lnt.ernet. 

Be it enact,ed by the Senate and House of Representatives of 

the Unit,ed Stat,es ofAmerica in Congress assembled, 

SECTION 1. SHORT TITLE. 

This Act may be cited as the "Restore Online Shoppers' Confidence Act". 

SEC. 2. FINDINGS; DECLARATION OF POLICY. 

The Congress finds the following: 

(1) The Internet has become an important channel of com­ merce in the United States, accounting for billions of dollars 

in retail sales every year. Over half of all American adults 

have now either made an online purchase or an online travel 

reservation. 

(2) Consumer confidence is essential to the growth of online commerce. To continue its development as a marketplace, the 

Internet must provide consumers with clear, accurate information and give sellers an opportunity to fairly compete with one another for consumers' business. 

(3) An investigation by the Senate Committee on Com­ merce Science, and Transportation found abundant evidence 

that the aggressive sales tactics many companies use against 

their online customers have undermin.ed consumer confidence 

in the Internet and thereby harmed the American economy. 

(4) The Committee showed that, in exchange for "bounties" 

and other payments, hundreds of reputable online retailers 

and websites shared their customers' billing information, 

including credit card and debit card numbers, with third party 

sellers through a process known as "data pass". These third 

party sellers in turn used aggressive, misleading sales tactics to charge millions of American consumers for membership clubs 

the consumers did not want. (5) Third party sellers offered membership clubs to con­ sumers as they were in the process of completing their initial 

transactions on hundreds of websites. These third party "posttransaction" offers were designed to make consumers think 

the offers were part of the initial purchase, rather than a new transaction with a new seller. 

(6) Third party sellers charged millions of consumers for 

membership clubs without ever obtaining consumers' billing 

information, including their credit or debit card information, 

directly from the consumers. Because third party sellers 

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S. 3386—2 

acquired consumers’ billing information from the initial merchant through ‘‘data pass’’, millions of consumers were unaware 

they had been enrolled in membership clubs. 

(7) The use of a ‘‘data pass’’ process defied consumers’ 

expectations that they could only be charged for a good or 

a service if they submitted their billing information, including 

their complete credit or debit card numbers. 

(8) Third party sellers used a free trial period to enroll 

members, after which they periodically charged consumers until 

consumers affirmatively canceled the memberships. This use 

of ‘‘free-to-pay conversion’’ and ‘‘negative option’’ sales took 

advantage of consumers’ expectations that they would have 

an opportunity to accept or reject the membership club offer 

at the end of the trial period. 

SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DECEPTIVE 

INTERNET SALES PRACTICES. 

(a) REQUIREMENTS FOR CERTAIN INTERNET-BASED SALES.—It 

shall be 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 financial account for any good or service 

sold in a transaction effected on the Internet, unless— 

(1) before obtaining the consumer’s billing information, the 

post-transaction third party seller has clearly and conspicuously 

disclosed to the consumer all material terms of the transaction, 

including— 

(A) a description of the goods or services being offered; 

(B) the fact that the post-transaction third party seller 

is not affiliated with the initial merchant, which may 

include disclosure of the name of the post-transaction third 

party in a manner that clearly differentiates the posttransaction third party seller from the initial merchant; 

and 

(C) the cost of such goods or services; and 

(2) the post-transaction third party seller has received the 

express informed consent for the charge from the consumer 

whose credit card, debit card, bank account, or other financial 

account will be charged by— 

(A) obtaining from the consumer— 

(i) the full account number of the account to be 

charged; and 

(ii) the consumer’s name and address and a means 

to contact the consumer; and 

(B) requiring the consumer to perform an additional 

affirmative action, such as clicking on a confirmation button 

or checking a box that indicates the consumer’s consent 

to be charged the amount disclosed. 

(b) PROHIBITION ON DATA-PASS USED TO FACILITATE CERTAIN 

DECEPTIVE INTERNET SALES TRANSACTIONS.—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 posttransaction third party seller. 

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S. 3386—3 

(c) APPLICATION WITH OTHER LAW.—Nothing in this Act shall 

be construed to supersede, modify, or otherwise affect the requirements of the Electronic Funds Transfer Act (15 U.S.C. 1693 et 

seq.) or any regulation promulgated thereunder.

(d) DEFINITIONS.—In this section: 

(1) INITIAL MERCHANT.—The term ‘‘initial merchant’’ means 

a person that has obtained a consumer’s billing information

directly from the consumer through an Internet transaction 

initiated by the consumer. 

(2) POST-TRANSACTION THIRD PARTY SELLER.—The term 

‘‘post-transaction third party seller’’ means a person that—

(A) sells, or offers for sale, any good or service on 

the Internet; 

(B) solicits the purchase of such goods or services on 

the Internet through an initial merchant after the consumer has initiated a transaction with the initial merchant; 

and 

(C) is not— 

(i) the initial merchant; 

(ii) a subsidiary or corporate affiliate of the initial 

merchant; or 

(iii) a successor of an entity described in clause

(i) or (ii). 

SEC. 4. NEGATIVE OPTION MARKETING ON THE INTERNET. 

It shall be unlawful for any person to charge or attempt to

charge any consumer for any goods or services sold in a transaction 

effected on the Internet through a negative option feature (as 

defined in the Federal Trade Commission’s Telemarketing Sales

Rule in part 310 of title 16, Code of Federal Regulations), unless 

the person— 

(1) provides text that clearly and conspicuously discloses 

all material terms of the transaction before obtaining the consumer’s billing information; 

(2) obtains a consumer’s express informed consent before 

charging the consumer’s credit card, debit card, bank account,

or other financial account for products or services through 

such transaction; and 

(3) provides simple mechanisms for a consumer to stop 

recurring charges from being placed on the consumer’s credit

card, debit card, bank account, or other financial account. 

SEC. 5. ENFORCEMENT BY FEDERAL TRADE COMMISSION. 

(a) IN GENERAL.—Violation of this Act or any regulation prescribed under this Act shall be treated as a violation of a rule 

under section 18 of the Federal Trade Commission Act (15 U.S.C. 

57a) regarding unfair or deceptive acts or practices. The Federal

Trade Commission shall enforce this Act in the same manner, 

by the same means, and with the same jurisdiction, powers, and 

duties as though all applicable terms and provisions of the Federal 

Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated 

into and made a part of this Act. 

(b) PENALTIES.—Any person who violates this Act or any regulation prescribed under this Act shall be subject to the penalties 

and entitled to the privileges and immunities provided in the Federal Trade Commission Act as though all applicable terms and 

provisions of the Federal Trade Commission Act were incorporated 

in and made part of this Act. 

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S. 3386—4 

(c) AUTHORITY PRESERVED.—Nothing in this section shall be 

construed to limit the authority of the Commission under any 

other provision of law. 

SEC. 6. ENFORCEMENT BY STATE ATTORNEYS GENERAL. 

(a) RIGHT OF ACTION.—Except as provided in subsection (e), 

the attorney general of a State, or other authorized State officer, 

alleging a violation of this Act or any regulation issued under

this Act that affects or may affect such State or its residents 

may bring an action on behalf of the residents of the State in 

any United States district court for the district in which the defendant is found, resides, or transacts business, or wherever venue 

is proper under section 1391 of title 28, United States Code, to 

obtain appropriate injunctive relief. 

(b) NOTICE TO COMMISSION REQUIRED.—A State shall provide 

prior written notice to the Federal Trade Commission of any civil 

action under subsection (a) together with a copy of its complaint, 

except that if it is not feasible for the State to provide such prior 

notice, the State shall provide such notice immediately upon instituting such action. 

(c) INTERVENTION BY THE COMMISSION.—The Commission may 

intervene in such civil action and upon intervening— 

(1) be heard on all matters arising in such civil action; 

and 

(2) file petitions for appeal of a decision in such civil action. 

(d) CONSTRUCTION.—Nothing in this section shall be construed— 

(1) to prevent the attorney general of a State, or other 

authorized State officer, from exercising the powers conferred 

on the attorney general, or other authorized State officer, by 

the laws of such State; or 

(2) to prohibit the attorney general of a State, or other 

authorized State officer, from proceeding in State or Federal 

court on the basis of an alleged violation of any civil or criminal 

statute of that State. 

(e) LIMITATION.—No separate suit shall be brought under this 

section if, at the time the suit is brought, the same alleged violation 

is the subject of a pending action by the Federal Trade Commission 

or the United States under this Act. 

Speaker of the House of Representatives. 

Vice President of the United States and 

President of the Senate. 

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