I 

111TH CONGRESS 

2D SESSION S. 3386 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 1, 2010 

Referred to the Committee on Energy and Commerce 

AN ACT 

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, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Restore Online Shop3 pers’ Confidence Act’’. 

4 SEC. 2. FINDINGS; DECLARATION OF POLICY. 

5 The Congress finds the following: 

6 (1) The Internet has become an important 

7 channel of commerce in the United States, account8 ing for billions of dollars in retail sales every year. 

9 Over half of all American adults have now either 

10 made an online purchase or an online travel reserva11 tion. 

12 (2) Consumer confidence is essential to the 

13 growth of online commerce. To continue its develop14 ment as a marketplace, the Internet must provide 

15 consumers with clear, accurate information and give 

16 sellers an opportunity to fairly compete with one an17 other for consumers’ business. 

18 (3) An investigation by the Senate Committee 

19 on Commerce, Science, and Transportation found 

20 abundant evidence that the aggressive sales tactics 

21 many companies use against their online customers 

22 have undermined consumer confidence in the Inter23 net and thereby harmed the American economy. 

24 (4) The Committee showed that, in exchange 

25 for ‘‘bounties’’ and other payments, hundreds of rep26 utable online retailers and websites shared their cusVerDate Mar 15 2010 21:06 Dec 01, 2010 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3386.RFH S3386

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1 tomers’ billing information, including credit card and 

2 debit card numbers, with third party sellers through 

3 a process known as ‘‘data pass’’. These third party 

4 sellers in turn used aggressive, misleading sales tac5 tics to charge millions of American consumers for 

6 membership clubs the consumers did not want. 

7 (5) Third party sellers offered membership 

8 clubs to consumers as they were in the process of 

9 completing their initial transactions on hundreds of 

10 websites. These third party ‘‘post-transaction’’ offers 

11 were designed to make consumers think the offers 

12 were part of the initial purchase, rather than a new 

13 transaction with a new seller. 

14 (6) Third party sellers charged millions of con15 sumers for membership clubs without ever obtaining 

16 consumers’ billing information, including their credit 

17 or debit card information, directly from the con18 sumers. Because third party sellers acquired con19 sumers’ billing information from the initial merchant 

20 through ‘‘data pass’’, millions of consumers were un21 aware they had been enrolled in membership clubs. 

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

23 consumers’ expectations that they could only be 

24 charged for a good or a service if they submitted 


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1 their billing information, including their complete 

2 credit or debit card numbers. 

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

4 to enroll members, after which they periodically 

5 charged consumers until consumers affirmatively 

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

7 conversion’’ and ‘‘negative option’’ sales took advan8 tage of consumers’ expectations that they would 

9 have an opportunity to accept or reject the member10 ship club offer at the end of the trial period. 

11 SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DE12 CEPTIVE INTERNET SALES PRACTICES. 

13 (a) REQUIREMENTS FOR CERTAIN INTERNET-BASED

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

15 third party seller to charge or attempt to charge any con16 sumer’s credit card, debit card, bank account, or other fi17 nancial account for any good or service sold in a trans18 action effected on the Internet, unless— 

19 (1) before obtaining the consumer’s billing in20 formation, the post-transaction third party seller has 

21 clearly and conspicuously disclosed to the consumer 

22 all material terms of the transaction, including— 

23 (A) a description of the goods or services 

24 being offered; 


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

2 party seller is not affiliated with the initial mer3 chant, which may include disclosure of the 

4 name of the post-transaction third party in a 

5 manner that clearly differentiates the post6 transaction third party seller from the initial 

7 merchant; and 

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

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

10 received the express informed consent for the charge 

11 from the consumer whose credit card, debit card, 

12 bank account, or other financial account will be 

13 charged by— 

14 (A) obtaining from the consumer— 

15 (i) the full account number of the ac16 count to be charged; and 

17 (ii) the consumer’s name and address 

18 and a means to contact the consumer; and 

19 (B) requiring the consumer to perform an 

20 additional affirmative action, such as clicking 

21 on a confirmation button or checking a box that 

22 indicates the consumer’s consent to be charged 

23 the amount disclosed. 

24 (b) PROHIBITION ON DATA-PASS USED TO FACILI25 TATE CERTAIN DECEPTIVE INTERNET SALES TRANSVerDate Mar 15 2010 21:06 Dec 01, 2010 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3386.RFH S3386

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1 ACTIONS.—It shall be unlawful for an initial merchant to 

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

3 financial account number, or to disclose other billing infor4 mation that is used to charge a customer of the initial 

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

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

7 that post-transaction third party seller. 

8 (c) APPLICATION WITH OTHER LAW.—Nothing in 

9 this Act shall be construed to supersede, modify, or other10 wise affect the requirements of the Electronic Funds 

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

12 promulgated thereunder. 

13 (d) DEFINITIONS.—In this section: 

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

15 merchant’’ means a person that has obtained a con16 sumer’s billing information directly from the con17 sumer through an Internet transaction initiated by 

18 the consumer. 

19 (2) POST-TRANSACTION THIRD PARTY SELL20 ER.—The term ‘‘post-transaction third party seller’’ 

21 means a person that— 

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

23 service on the Internet; 

24 (B) solicits the purchase of such goods or 

25 services on the Internet through an initial merVerDate Mar 15 2010 21:06 Dec 01, 2010 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3386.RFH S3386

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1 chant after the consumer has initiated a trans2 action with the initial merchant; and 

3 (C) is not— 

4 (i) the initial merchant; 

5 (ii) a subsidiary or corporate affiliate 

6 of the initial merchant; or 

7 (iii) a successor of an entity described 

8 in clause (i) or (ii). 

9 SEC. 4. NEGATIVE OPTION MARKETING ON THE INTERNET. 

10 It shall be unlawful for any person to charge or at11 tempt to charge any consumer for any goods or services 

12 sold in a transaction effected on the Internet through a 

13 negative option feature (as defined in the Federal Trade 

14 Commission’s Telemarketing Sales Rule in part 310 of 

15 title 16, Code of Federal Regulations), unless the per16 son— 

17 (1) provides text that clearly and conspicuously 

18 discloses all material terms of the transaction before 

19 obtaining the consumer’s billing information; 

20 (2) obtains a consumer’s express informed con21 sent before charging the consumer’s credit card, 

22 debit card, bank account, or other financial account 

23 for products or services through such transaction; 

24 and 


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1 (3) provides simple mechanisms for a consumer 

2 to stop recurring charges from being placed on the 

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

4 other financial account. 

5 SEC. 5. ENFORCEMENT BY FEDERAL TRADE COMMISSION. 

6 (a) IN GENERAL.—Violation of this Act or any regu7 lation prescribed under this Act shall be treated as a viola8 tion of a rule under section 18 of the Federal Trade Com9 mission Act (15 U.S.C. 57a) regarding unfair or deceptive 

10 acts or practices. The Federal Trade Commission shall en11 force this Act in the same manner, by the same means, 

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

13 though all applicable terms and provisions of the Federal 

14 Trade Commission Act (15 U.S.C. 41 et seq.) were incor15 porated into and made a part of this Act. 

16 (b) PENALTIES.—Any person who violates this Act 

17 or any regulation prescribed under this Act shall be sub18 ject to the penalties and entitled to the privileges and im19 munities provided in the Federal Trade Commission Act 

20 as though all applicable terms and provisions of the Fed21 eral Trade Commission Act were incorporated in and 

22 made part of this Act. 

23 (c) AUTHORITY PRESERVED.—Nothing in this sec24 tion shall be construed to limit the authority of the Com25 mission under any other provision of law. 


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1 SEC. 6. ENFORCEMENT BY STATE ATTORNEYS GENERAL. 

2 (a) RIGHT OF ACTION.—Except as provided in sub3 section (e), the attorney general of a State, or other au4 thorized State officer, alleging a violation of this Act or 

5 any regulation issued under this Act that affects or may 

6 affect such State or its residents may bring an action on 

7 behalf of the residents of the State in any United States 

8 district court for the district in which the defendant is 

9 found, resides, or transacts business, or wherever venue 

10 is proper under section 1391 of title 28, United States 

11 Code, to obtain appropriate injunctive relief. 

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

13 shall provide prior written notice to the Federal Trade 

14 Commission of any civil action under subsection (a) to15 gether with a copy of its complaint, except that if it is 

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

17 State shall provide such notice immediately upon insti18 tuting such action. 

19 (c) INTERVENTION BY THE COMMISSION.—The Com20 mission may intervene in such civil action and upon inter21 vening— 

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

23 action; and 

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

25 civil action. 


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

2 construed— 

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

4 or other authorized State officer, from exercising the 

5 powers conferred on the attorney general, or other 

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

7 or 

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

9 or other authorized State officer, from proceeding in 

10 State or Federal court on the basis of an alleged vio11 lation of any civil or criminal statute of that State. 

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

13 under this section if, at the time the suit is brought, the 

14 same alleged violation is the subject of a pending action 

15 by the Federal Trade Commission or the United States 

16 under this Act. 

Passed the Senate November 30, 2010. 

Attest: NANCY ERICKSON, 

Secretary. 


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