I 

111TH CONGRESS 

2D SESSION H. R. 5707 

To protect consumers from certain aggressive sales tactics on the Internet. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 1, 2010 

Mr. SPACE introduced the following bill; which was referred to the Committee 

on Energy and Commerce 

A BILL 

To protect consumers from certain aggressive sales tactics 

on the Internet. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Restore Online Shop5 pers’ Confidence Act’’. 

6 SEC. 2. FINDINGS; DECLARATION OF POLICY. 

7 The Congress finds the following: 

8 (1) The Internet has become an important 

9 channel of commerce in the United States, account10 ing for billions of dollars in retail sales every year. 

11 Over half of all American adults have now either 


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1 made an online purchase or an online travel reserva2 tion. 

3 (2) Consumer confidence is essential to the 

4 growth of online commerce. To continue its develop5 ment as a marketplace, the Internet must provide 

6 consumers with clear, accurate information and give 

7 sellers an opportunity to fairly compete with one an8 other for consumers’ business. 

9 (3) An investigation by the Senate Committee 

10 on Commerce, Science, and Transportation found 

11 abundant evidence that the aggressive sales tactics 

12 many companies use against their online customers 

13 have undermined consumer confidence in the Inter14 net and thereby harmed the American economy. 

15 (4) The Committee showed that, in exchange 

16 for ‘‘bounties’’ and other payments, hundreds of rep17 utable online retailers and Web sites shared their 

18 customers’ billing information, including credit card 

19 and debit card numbers, with third party sellers 

20 through a process known as ‘‘data pass’’. These 

21 third party sellers in turn used aggressive, mis22 leading sales tactics to charge millions of American 

23 consumers for membership clubs the consumers did 

24 not want. 


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1 (5) Third party sellers offered membership 

2 clubs to consumers as they were in the process of 

3 completing their initial transactions on hundreds of 

4 Web sites. These third party ‘‘post-transaction’’ of5 fers were designed to make consumers think the of6 fers were part of the initial purchase, rather than a 

7 new transaction with a new seller. 

8 (6) Third party sellers charged millions of con9 sumers for membership clubs without ever obtaining 

10 consumers’ billing information, including their credit 

11 or debit card information, directly from the con12 sumers. Because third party sellers acquired con13 sumers’ billing information from the initial merchant 

14 through ‘‘data pass’’, millions of consumers were un15 aware they had been enrolled in membership clubs. 

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

17 consumers’ expectations that they could only be 

18 charged for a good or a service if they submitted 

19 their billing information, including their complete 

20 credit or debit card numbers. 

21 (8) Third party sellers used a free trial period 

22 to enroll members, after which they periodically 

23 charged consumers until consumers affirmatively 

24 canceled the memberships. This use of ‘‘free-to-pay 

25 conversion’’ and ‘‘negative option’’ sales took advanVerDate Mar 15 2010 02:54 Jul 07, 2010 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5707.IH H5707

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1 tage of consumers’ expectations that they would 

2 have an opportunity to accept or reject the member3 ship club offer at the end of the trial period. 

4 SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DE5 CEPTIVE INTERNET SALES PRACTICES. 

6 (a) REQUIREMENTS FOR CERTAIN INTERNET-BASED

7 SALES.—It shall be unlawful for any post-transaction 

8 third party seller to charge or attempt to charge any con9 sumer’s credit card, debit card, bank account, or other fi10 nancial account for any good or service sold in a trans11 action effected on the Internet, unless— 

12 (1) before obtaining the consumer’s billing in13 formation, the post-transaction third party seller has 

14 clearly and conspicuously disclosed to the consumer 

15 all material terms of the transaction, including— 

16 (A) a description of the goods or services 

17 being offered; 

18 (B) the fact that the post-transaction third 

19 party seller is not affiliated with the initial mer20 chant, which may include disclosure of the 

21 name of the post-transaction third party in a 

22 manner that clearly differentiates the post23 transaction third party seller from the initial 

24 merchant; and 

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


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

2 received the express informed consent for the charge 

3 from the consumer whose credit card, debit card, 

4 bank account, or other financial account will be 

5 charged by— 

6 (A) obtaining from the consumer— 

7 (i) the full account number of the ac8 count to be charged; and 

9 (ii) the consumer’s name and address 

10 and a means to contact the consumer; and 

11 (B) requiring the consumer to perform an 

12 additional affirmative action, such as clicking 

13 on a confirmation button or checking a box that 

14 indicates the consumer’s consent to be charged 

15 the amount disclosed. 

16 (b) PROHIBITION ON DATA-PASS USED TO FACILI17 TATE CERTAIN DECEPTIVE INTERNET SALES TRANS18 ACTIONS.—It shall be unlawful for an initial merchant to 

19 disclose a credit card, debit card, bank account, or other 

20 financial account number, or to disclose other billing infor21 mation that is used to charge a customer of the initial 

22 merchant, to any post-transaction third party seller for 

23 use in an Internet-based sale of any goods or services from 

24 that post-transaction third party seller. 


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1 (c) LIMITATIONS ON USE OF NEGATIVE OPTION

2 FEATURE IN INTERNET-BASED SALES TRANSACTIONS.— 

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

4 to charge any consumer for any goods or services sold in 

5 a transaction effected on the Internet through a negative 

6 option feature, unless— 

7 (1) before obtaining the consumer’s initial 

8 agreement to participate, the seller has clearly and 

9 conspicuously disclosed all material terms of the 

10 transaction, including— 

11 (A) the name of the entity offering the 

12 goods or services; 

13 (B) a description of the goods or services 

14 being offered; 

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

16 (D) notice of when billing will begin and at 

17 what intervals the charges will occur; 

18 (E) the length of any trial period; 

19 (F) a statement that the consumer’s ac20 count will be charged unless the consumer takes 

21 affirmative action and the steps the consumer 

22 must take to the avoid the charge; and 

23 (G) instructions for stopping the recurring 

24 charges in accordance with the requirements of 

25 paragraph (3); 


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1 (2) the seller has obtained the express informed 

2 consent described in subsection (a)(2) from the con3 sumer before charging or attempting to charge the 

4 consumer’s credit card, debit card, bank account, or 

5 other financial account on a recurring basis; and 

6 (3) the seller enables the consumer to stop re7 curring charges from being made to the consumer’s 

8 credit card, debit card, bank account, or other finan9 cial account through a simple process that is avail10 able via the Internet and email. 

11 (d) APPLICATION WITH OTHER LAW.—Nothing in 

12 this Act shall be construed to supersede, modify, or other13 wise affect the requirements of the Electronic Fund 

14 Transfer Act (15 U.S.C. 1693 et seq.) or any regulation 

15 promulgated thereunder. 

16 (e) DEFINITIONS.—In this section: 

17 (1) INITIAL MERCHANT.—The term ‘‘initial 

18 merchant’’ means a person that has obtained a con19 sumer’s billing information directly from the con20 sumer through an Internet transaction initiated by 

21 the consumer. 

22 (2) NEGATIVE OPTION FEATURE.—The term 

23 ‘‘negative option feature’’ has the meaning given 

24 that term in section 310.2(t) of the Federal Trade 


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1 Commission’s Telemarketing Sales Rule regulations 

2 (16 C.F.R. 310.2(t)). 

3 (3) POST-TRANSACTION THIRD PARTY SELL4 ER.—The term ‘‘post-transaction third party seller’’ 

5 means a person that— 

6 (A) sells, or offers for sale, any good or 

7 service on the Internet; 

8 (B) solicits the purchase of such goods or 

9 services on the Internet through an initial mer10 chant after the consumer has initiated a trans11 action with the initial merchant; and 

12 (C) is not a subsidiary or corporate affil13 iate of the initial merchant. 

14 SEC. 4. ENFORCEMENT BY FEDERAL TRADE COMMISSION. 

15 (a) IN GENERAL.—Violation of this Act or any regu16 lation prescribed under this Act shall be treated as a viola17 tion of a rule under section 18 of the Federal Trade Com18 mission Act (15 U.S.C. 57a) regarding unfair or deceptive 

19 acts or practices. The Federal Trade Commission shall en20 force this Act in the same manner, by the same means, 

21 and with the same jurisdiction, powers, and duties as 

22 though all applicable terms and provisions of the Federal 

23 Trade Commission Act (15 U.S.C. 41 et seq.) were incor24 porated into and made a part of this Act. 


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1 (b) REGULATIONS.—Notwithstanding any other pro2 vision of law, the Commission may promulgate such regu3 lations as it finds necessary or appropriate to carry out 

4 this Act under section 553 of title 5, United States Code. 

5 (c) PENALTIES.—Any person who violates this Act or 

6 any regulation prescribed under this Act shall be subject 

7 to the penalties and entitled to the privileges and immuni8 ties provided in the Federal Trade Commission Act as 

9 though all applicable terms and provisions of the Federal 

10 Trade Commission Act were incorporated in and made 

11 part of this Act. 

12 (d) AUTHORITY PRESERVED.—Nothing in this sec13 tion shall be construed to limit the authority of the Com14 mission under any other provision of law. 

15 SEC. 5. ENFORCEMENT BY STATE ATTORNEYS GENERAL. 

16 (a) RIGHT OF ACTION.—Except as provided in sub17 section (e), the attorney general of a State, or other au18 thorized State officer, alleging a violation of this Act or 

19 any regulation issued under this Act that affects or may 

20 affect such State or its residents may bring an action, as 

21 parens patriae, on behalf of the residents of the State in 

22 any United States district court for the district in which 

23 the defendant is found, resides, or transacts business, or 

24 wherever venue is proper under section 1391 of title 28, 

25 United States Code, to enjoin further violation, to compel 


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1 compliance with this Act and any regulation issued under 

2 this Act, to obtain damages, restitution, or other com3 pensation on behalf of residents of such State, or to obtain 

4 such further and other relief as the court may deem appro5 priate. 

6 (b) NOTICE TO COMMISSION REQUIRED.—A State 

7 shall provide prior written notice to the Federal Trade 

8 Commission of any civil action under subsection (a) to9 gether with a copy of its complaint, except that if it is 

10 not feasible for the State to provide such prior notice, the 

11 State shall provide such notice immediately upon insti12 tuting such action. 

13 (c) INTERVENTION BY THE COMMISSION.—The Com14 mission may intervene in such civil action and upon inter15 vening may— 

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

17 action; and 

18 (2) file petitions for appeal of a decision in such 

19 civil action. 

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

21 construed— 

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

23 or other authorized State officer, from exercising the 

24 powers conferred on the attorney general, or other 


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1 authorized State officer, by the laws of such State; 

2 or 

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

4 or other authorized State officer, from proceeding in 

5 State or Federal court on the basis of an alleged vio6 lation of any civil or criminal statute of that State. 

7 (e) LIMITATION.—Whenever a civil action has been 

8 instituted by or on behalf of the Federal Trade Commis9 sion for violation of this Act or any regulation prescribed 

10 under this Act, no State may, during the pendency of such 

11 action instituted by or on behalf of the Commission, insti12 tute a civil action under subsection (a) of this section 

13 against any defendant named in the complaint in such ac14 tion for violation of this Act or any regulation prescribed 

15 under this Act as alleged in such complaint. 

Æ 


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