CALIFORNIA “OPTS IN” ON NEGATIVE OPTION

The following post is courtesy of our friend Bill Rothbard. Bill is a former FTC attorney and is now practicing in the field of ad law. You can learn more here: www.ftcadlaw.com

Not to be outdone by federal policymakers on the “hot button” regulatory issues of the day, California once again has characteristically entered the fray by recently enacting one of the toughest laws in the nation on negative option, or “continuity,” marketing, the common yet increasingly scrutinized practice in which a consumer consents in advance to purchase products on a recurring basis until he chooses to cancel. 

Nationally, the new Online Restore Shoppers’ Confidence Act (also known as “Rockefeller,” after its sponsor, Sen. Jay Rockefeller, D-WV) now requires disclosure of Internet continuity offer terms before the seller obtains consumer billing information. The Federal Trade Commission also is continuing to crack down on negative options, most recently in its big Internet marketing case against iWorks (disclosure: author represents a defendant in the action.)

Now, California has joined the act, and raised the ante, by enacting Business and Professions Code §§17600-17606, which – in some respects – is more exacting than the federal standards.

The new California law requires marketers to:

• Clearly and conspicuously disclose the terms of negative options, either in “larger type than the surrounding text,” or, if the same size as surrounding text, then in “contrasting type, font, or color” or “set off” by markings, “in a manner that clearly calls attention to the language.” This minimum mandate of “equal or greater size” is more precise and inflexible than the FTC’s “clear and conspicuous” standard.
• Obtain the consumer’s advance affirmative consent for future recurring charges.
• Provide a written acknowledgement of the negative option that includes the offer terms, cancellation policy and cancellation method.
• In the case of a free-trial offer, disclose and honor the cancellation policy.
• Provide a toll-free telephone number, E-mail address, postal address (when the seller directly bills the consumer), or another easy and timely cancellation method.
• Notify consumers of any material changes to the negative option terms prior to their implementation.

Violations can lead to civil penalties of up to $2,500 per violation (each unlawful continuity offer or transaction). The California Attorney General and District Attorneys are among the most aggressive state consumer protection agencies in the country. Undoubtedly, they are already looking for “test cases” to enforce the statute, so if you use negative option in California (which can include any Internet-based offer made to a California resident), beware of the new requirements – in particular the need for disclosures to be of “equal or greater size” than the surrounding text. Read More on our site at www.ftcadlaw.com

Turning a foe into a friend

One of my favorite phone calls is, unfortunately, a common theme. I answer the phone to hear, “Yeh, you took money from my account, who are you, I never authorized any charges from you people.” After explaining the person bounced a check and we re-deposited it, electronically, the caller then says, “Well who was the check written to?” Now, not knowing anything about this person, I simply ask, “What is your name, and what state are you calling from?” Once given this information, I am able to search which client this check was written to and give the information to the caller, who at this point, has finally relaxed and is more at ease. I often receive calls where the person is irate and not pleasant but I find that the calmer I am, the less tension there becomes in the caller’s tone and eventually ends with a relaxed conversation and maybe even a laugh. Or, I end up hearing the person’s life sob story; if we can bring a smile to someone’s face or even be an outlet for them to vent their life’s obstacles, we’ve helped this person have a better day.

- Stephanie Siclari

I have PayPal for my business. Do I still need a merchant account?

I have PayPal for my business. Do I still need a merchant account?

YES. And you should also keep paypal.

Paypal provides an easy and convenient way to begin taking payments for your business yet it also has a few limitations.

1. Feel – Paypal gives a site an “amateurish” feel. Customers tend to believe the business is very small if it only accepts paypal.

2. Funding Time – Paypal requires manual transfers from your paypal account to your bank account where an InChek account deposits directly to your bank

3. Flexibility – The reporting functionality within the InChek payment gateway provides a far superior experience relative to tracking and searching transaction data

4. Fees – Merchant accounts can often be cheaper than Paypal

5. Personal service. I love paypal but don’t love trying to get answers from them by phone.

So while I definitely recommend keeping your paypal account, I would also venture a guess that you do not realize how easy and affordable it is to get set up with your own merchant account as well. More payment options = more flexibility = more happy customers + more income for you.