Much of the discussion amongst marketers at Affiliate Summit West 2010 was about the recent crackdown by VISA and Mastercard on those online companies using forced continuity (negative option, free trials and free shipping ploys) to sell their products.
Forced continuity happens when a customer who wants Product A is forced to pay ongoing charges for a subscription to Product B in order to access Product A. Product B is usually presented as a bonus-loaded trial offer for “just $1″.
Salivating over their good fortune, the unsuspecting victim signs up for the offer with their credit card and once the trial period is over, recurring charges kick in. In too many cases, the information regarding the recurring billing requires a microscope to decipher. As most consumers apparently haven’t the stamina to read glaringly obvious information regarding the conditions of their purchase, suffice to say that they won’t bother with the microscope.
Six months later the buyer realizes that they’ve been charged $39.95 monthly for a product that they haven’t used in 5, and then attempt to terminate the subscription. Termination involves a herculean effort over at least 3 months during which their card is still being charged, IF they are able to resolve the issue with the merchant, who mysteriously disappears when talk turns to cancellation, and especially refunds. Too often the customer is forced to appeal to their credit card company.
Although this practice is illegal in most of the U.S. and Canada, slimy Internet marketers have employed this practice successfully to scam millions out of consumers — until a few weeks ago.
I guess after dealing with too many angry consumers, VISA and MasterCard finally got wise a few weeks ago and shut down over 100 merchant accounts of those using forced continuity programs.
In a letter to one affected party, the merchant account provider reminds them that:
The FTC has recently published guidelines regarding “Negative Option” enrollment programs and is taking a very aggressive position against merchants utilizing/employing this business practice. Recommendations take in part from the FTC’s website may include but are not limited to the following:
Material terms should be disclosed in a clear, concise manner. Unnecessarily long or inconsistent terms are viewed as an attempt to mislead the consumer.
Terms should be disclosed in a conspicuous manner, clearly placed and labeled on websites in a location that indicates the importance and relevance to the transaction. Fonts and colors must be easy to view.
Material terms must be disclosed prior to completion of the transaction and before a financial obligation is incurred by the consumer.
Customers must provide affirmative consent to any offer, examples include a mandatory “I Agree…” statement checkbox, where the customer is acknowledging the Terms and Conditions of the offer and consents to be entered into continuity program as a result of completing the transaction. Pre-checked boxes do not qualify as affirmative consent.
Merchants must not discourage or make difficult in any way the disclosed cancellation procedures and all cancellation requests must be honored in accordance with the stated terms of the transaction.
Gee, what a concept. Honesty, integrity and transparency.
So, here’s the warning.
If you are promoting Internet marketing business opportunities, ACAI berry, weight loss and other products that use forced continuity, it’s time to check your merchants’ offers thoroughly, and confirm that they’re still in business.
You might be shocked to learn which of the big players no longer have merchant accounts.
About Rosalind Gardner
Very dear & so precious ROS!
Thanks a millionfor your kindness, carefulness
and interest. I so like to meet you at affiliate
summit, wherever & whenever but I am so far in the
distance & so close in my heart.
I am from Prishtina – Kosovo (ex Yugoslavia)
Lovingly, Semy.
Well, thank you Rosalind for the heads up on that fact. I have to say I’m feeling pretty jubilant about it, because frankly I’ve felt that the way forced continuity has been used is really pretty unethical and it has turned me off for a very long time.
Tricking your customers is not the way to encourage continued relationships. Maybe in the short term people believed it was easier than building real relationships through respect and trust, but obviously, it is a very short sighted solution.
I’m not often a big fan of the FTC and over regulation by the government in any sense, but this is one where I have to wholeheartedly tip my hat.
Hey Rosalind,
A good friend of mine who I wrote copy for got shut down and he has been FTC compliant and completely transparent since October. At high volumes, continuity is a really problematic, beast of a business model to work with.
I am SO pleased about this. I hate forced continuity and would never do it but it seems to be a staple in Internet Marketing. It can only be good news for those who want to market ethically.
I myself have sometimes had a heck of a time trying to cancel a few of those. And they were in the “make money online” niche. I’ve been doing this less than a year now, your book was my first investment in educating myself. I try to be honest and have everything out in the open and that’s the best policy for everyone, especially the customers.
I encountered this situation once upon a time with a product, which was being promoted on TV, online and in magazines. I was in the process of ordering when I came close to the end of ordering and submitting then Bam! Pop up “special offers” as noted in this post. The pop ups covered the order window preventing me from completing order without clicking on it. Rather then proceeding I decided to Google the offer being presented and WOW so glad I did what appeared was a list of people in various levels of distress relating to similar problems noted in this post above. These steps I took because I did read the fine print. Because of this intrusive pop up that would not click off which also was enrolling me in a third party program. I then was immediately inclined to cancel and abort ordering from vendor. I contacted vender and explained the reason they had just lost a sale. My friends the print in “special offers” may be small but worth the hassle to read and re read…Always a believer of nothing in life is free.
Great meeting you in person (finally) at the Affiliate Summit. I too heard a bit about the continuity programs there. I’ve been considering doing a membership site that goes along with my 16 ClickBank products so this was good information to make sure that if I do it, it is done in a clear, transparent and legal manner.
Michael
TheRomantic.com
Hey Michael,
It was a real pleasure to meet you in person as well and I’ve been kicking my dufus ever since for not suggesting we continue on to lunch together. Next time!
Cheers,
Ros
Oh thank goodness! Scams of any nature have a noxious odor to them; those that involve 3-point type, obfuscation and hyper-legalese are the worst. Thanks for shining light on the details of the FTC statement.
If you didn’t have a reason before to keep your business on the up-and-up, this is a really great one. I’ve always had a problem with marketers that feel like they have to resort to some sort of trickery to get people to open their wallets.
Good riddance to those that were being shady about this practice, kudos to the folks that are always open and transparent about exactly what they are delivering to their customers and how much it really costs.
Good day to you Rosalind…Just want to tell you that you’re such a good writer, and still want to hear more from you…
I’m glad to see that some of the uglier side of Internet Marketing is being cleaned up, it can’t happen too soon. As you know personally, Ros, if you sell a good product and provide value to your customers, you’ll build a business that will survive in the long run, plus you’ll be able to look yourself in the mirror in the morning. I don’t have much sympathy for those who provide false testimonials, or scam and cheat others with forced continuity and other shady business practices. Good job Visa and MasterCard!
I absolutely LOVE the “1 week trial for $4.95″ offers that have sprung up recently for many Internet Marketing products!
I ONLY pay with PayPal.
I pay my $1 or $4.95, login, download every file and video and then cancel my subscription via PayPal before the week is over. Fantastic.
Hi Paul,
I suppose that strategy works well enough if you don’t want “Product A”, but just the bonuses. But on the topic of forced continuity, most folks purchase not for the bonuses but for the main deal / subscription, which they’d no longer get if they cancel.
Cheers,
Ros
It’s about time. And no, I wouldn’t be an itty bitty bit shocked…if I name at least half of them in 30 seconds or less, do I win something?
Thank you Rosalind for this article.
This last year I had not one, but TWO in a row that were
using Forced Continuity in their Business Model. I hated
to see it as it was something I didn’t want to have to deal
with as I had enough on my plate already.
I followed through with due diligence.
It took me two months for one of the setups to get removed
from my Debit Card (which was a Bank Card….
– filed Affidavit with complaint
– will file a Record of Note for the State Supreme Court
For the second one I had to ‘find the address’ of the actual
owner of the On-Line service.
– took 2 months before their 24-hour response team responded
– took 3 tries AFTER this before they would agree to Stop billing
– took me writing a note to the FTC about the practice
– discovered that a Merchandiser was the one that showed up on
my Credit Card (meaning no Link-Back to the original purchase)
– filed due diligence papers with C3.org and FTC
– spent 5 months watching my Credit Card like a hawk and filed
repeated papers and other against the Merchandiser
– final comments and questions had me asking the originator IF
they wanted me to file a class-act Felony against them.
At which point, after the lawyers spoke to each other, there was a removal
of my listing, my billing, etc.
I consider this a form of Fraud as I did read the entire document and had to
tell the Customer Service people that there were NO statements requiring me
to purchase anything as there was no Billing Statements showing the exact amount of a purchase for stated, Membership Service.
The idea that an “included” Membership meant the same thing as required, went way beyond my own personal Business Ethics.
It’s not just Buyer beware, as this person was actually teaching others to
‘do the same thing’. When I first heard in one of his mp3 files that “..once
you have their Credit Card, you’re in..”.
It made me wonder after this IF I was the only one. From what I see here it
is quite a mess.
Hopefully we can get this out to the Public as well.
Thank you for bringing this to our attention.
Mike cH
There go the eCigs!