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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3386 Engrossed in Senate (ES)]

111th CONGRESS
  2d Session
                                S. 3386

_______________________________________________________________________

                                 AN ACT

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

    Be it enacted by the Senate and House of Representatives of the 
United States of America 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 
        commerce 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 Commerce, 
        Science, and Transportation found abundant evidence that the 
        aggressive sales tactics many companies use against their 
        online customers have undermined 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 
        consumers as they were in the process of completing their 
        initial transactions on hundreds of websites. These third party 
        ``post-transaction'' 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 
        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 post-transaction 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 post-transaction third party seller.
    (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.
    (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.

            Passed the Senate November 30, 2010.

            Attest:

                                                             Secretary.
111th CONGRESS

  2d Session

                                S. 3386

_______________________________________________________________________

                                 AN ACT

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