The Federal Trade Commission (FTC) and the Attorneys General of Ohio and Illinois recently entered into a stipulated settlement order with a credit monitoring company arising out of the company’s alleged conduct concerning the use of an online “negative option” to charge consumers. The settlement requires the company to pay $22 million in consumer refunds and imposes an injunction to halt the alleged conduct.

In a complaint filed last week in federal court in California, the FTC and the two states alleged that One Technologies, LP and certain affiliates (collectively, “One Technologies”), offered consumers “free” online access to their credit scores through products such as MyCreditHealth and ScoreSense, but did not adequately disclose that by accessing the credit score, consumers would be enrolling in a credit monitoring program that charged a recurring $29.95 monthly fee until the consumer called to cancel. The complaint further asserted that consumers often had to make repeated calls to secure the cancellation, and that refunds were often denied to those who claimed they did not knowingly enroll in the program.

The complaint asserted claims for violation of Section 5(a) of the FTC Act, and Section 4 of the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits charging consumers online through a negative option feature unless:

  • Clear and conspicuous disclosures are made about the material terms of the transaction before obtaining a consumer’s billing information
  • The consumer’s express informed consent is obtained before charging the consumer
  • A simple mechanism is provided to stop recurring charges

The complaint also alleged claims by the two states for violation of their respective consumer fraud statutes.

Under the proposed settlement order also filed last week, One Technologies is required to pay the FTC $22 million, which is to be used for consumer redress. The settlement order also contains a number of provisions imposing injunctive relief on One Technologies, including:

  • Prohibiting certain misrepresentations in the marketing and selling of products with a negative option feature
  • Requiring certain clear and conspicuous disclosures before a customer consents to pay for a product with a negative option feature
  • Requiring that a customer’s express consent be obtained through certain defined methods before a negative option feature may be used
  • Requiring certain disclosures about the company’s refund policy as well as a simple mechanism for consumers to obtain refunds

The order also imposes a general prohibition on violations of ROSCA, and certain compliance reporting and recordkeeping requirements.

Members of Ballard Spahr’s Consumer Financial Services Group regularly assist clients to comply with FTC guidance on online marketing, including ROSCA and other consumer protection laws and regulations. The Group has a team of lawyers with extensive experience assisting clients with marketing campaigns, including telemarketing and direct marketing.

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or, or Joel E. Tasca at 215.864.8188 or

Copyright © 2014 by Ballard Spahr LLP.
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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.







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