FTC refers ROSCA case against software company and executives to DOJ
On June 17, the FTC announced an enforcement action against a software company and two of its executives for its practices related to its subscription model. According to the redacted complaint filed by the DOJ (upon referral from the FTC), defendant allegedly failed to adequately disclose to consumers the terms associated with its year-long subscription, and allegedly failed to obtain the consumer’s express informed consent before charging them. Defendant’s “Annual, Paid Monthly” subscription plan allegedly included early termination fees (ETF) that were not clearly disclosed to consumers upon enrollment. In particular, the ETF disclosures were buried on the company’s website in small print or required consumers to hover over small icons to find the disclosures. The DOJ also alleged defendant used the early termination fees to discourage consumers from canceling their plans, which was also difficult for consumers to do. Defendant’s practices allegedly violated the Restore Online Shoppers’ Confidence Act (ROSCA). The DOJ will be seeking injunctive relief, civil penalties, equitable monetary relief, as well as other relief.