Thursday, October 23, 2008

Time To Outlaw Negative-Option Marketing? Ultra Relief Sends Surprise Shipments And Bills To Utah Customers

Ever hear of "negative-option" marketing? You probably have - if you sign up for a free trial of a product and took the time to check the fine print, which usually says "You will receive regular shipments at full price unless you tell us to cancel".

Except sometimes the fine print is just a little too fine - or is not located where one would expect it to be. And on October 23rd, 2008, KSL Channel 5 reported on just such a case. Sally Bridges accepted a free trial offer of a pain relief creme from Ultra Relief. Only a $4.00 shipping charge. She gave the company her credit card number. Sample packets of creme subsequently received.

Then surprise, surprise. Her credit card was suddenly billed for $134, and for the next two months, she received more tubes of Ultra Creme, at $67 a whack. She didn't order it. But the fact is, unbeknownst to her, she did - by failing to check off an obscure opt-out provision located at the bottom of the company's web page. Watch the embedded KSL news video below:

Video Courtesy of KSL.com



The Utah Better Business Bureau says the problem with negative-option marketing has gotten so prevalent that it sorts through hundreds of complaints a year about this type of practice. And they've received over 200 consumer complaints about Ultra Relief alone. Another website lists a whole litany of complaints about Ultra Relief HERE.

In a response to KSL's report, a spokesperson said that the "pre-checked" box on the Web site was intended for "consumer ease". But they have now made a change by putting a link to the terms and conditions next to the spot where the purchase is made. They sugarcoat their business model by referring to it as a "continuity plan" (which is sort of like referring to Communism as "agrarian reform"). They say it provides the consumer a continuous service or product each month without requiring the customer to re-order. As for Sally Bridges, although the company claims that she's not entitled to a refund because she did not return the product as required, they're going to give her one anyway, as a "courtesy".

KSL recommends taking the following progressive steps if this happens to you:

- First, try contacting the company directly to dispute the charges or cancel the shipments.
- Dispute the charges through your credit card company or bank; however, we contacted several credit card firms who told us if the company can show that you have agreed to the offer, you may have to pay the bill.
- File a complaint with the Better Business Bureau or the Utah Division of Consumer Protection.

Additional information on negative-option marketing can be found at the Federal Trade Commission (FTC) website and in this 2005 Consumer Affairs article, The Canadian province of Ontario outlawed negative-option marketing in 2005; earlier efforts to ban it nationwide foundered, as did similar initiatives in the United Kingdom.

Commentary: While I don't like to impose any more regulation upon business than is absolutely necessary, the practice of negative-option marketing is so pervasive, abusive, and confusing that it's time to consider outlawing the practice altogether. Negative-option marketing was not instituted by popular demand; instead, it was conceived as a pernicious marketing scheme designed to increase corporate profits through implicit entrapment. Consequently, outlawing it would not result in any consumer protest, but most likely would be welcomed by the general public.

4 comments:

steel68 said...

Consumers are such easy prey!Only the few understand the "fine print",language or are even willing to put in the time to read it completely at all.I paid a 24 Hour Fitness contract off a couple of years ago in cash in order to avoid any potential adjustable rates and along with the now accepted scams of enrollment fees and processing fees,I was charged $14 dollars as a "pre-payment fee".Hmmmm?Was I being penalized for paying in cash?You bet I was!

Deseret Dawg said...

Excellent point about people not wanting to take the time to read the fine print. Most of the fine print is not even applicable to the average consumer, anyway.

What surprised me was when I went back and read the new comments on the KSL story, and there was at least one-third of the respondents who actually defend this practice. What a bunch of tools! How can people defend this sort of financial manipulation? No wonder the financial industry was able to get away with pulling so much B.S.

Anonymous said...

Seriously folks, it is time you take responsibilty for your own actions. Read the fine print. Read any terms that you have to agree to. Do this BEFORE you consent to purchase. Stop all of your wimpering over how the big bad corporation has taken advantage of you. You all remind me of a bunch of stupid children. How can you possibly think that in this day and age ANYTHING would be "free". Please.

Anonymous said...

Just as a perspective - a friend of mine started a business doing this - they now generate over $25M per year in sales... scamming people...