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The FTC announced today that it obtained a court order barring
the two remaining defendants in a group of marketers from engaging
in deceptive marketing and billing tactics.
The original complaint from 2015 alleged that defendants
deceptively offered free trials of their products under a variety
of brand names including "Aura Vie," "Dellure,"
"LeOR Skincare," and "Miracle Face Kit."
Specifically, the Complaint alleges, the defendants offered
"risk-free" trials through online banners, pop-up ads and
affiliate websites. They required consumers who accepted the
"risk-free" trials to provide their credit or debit card
billing information, purportedly to pay nominal shipping and
handling fees. However, within a few days of receiving
consumers' billing information, Defendants charged consumers
the full cost of the products, imposing charges of nearly $100.
Defendants also allegedly refused to provide refunds for product
returns unless consumers met onerous conditions that were not
adequately disclosed. Additionally, after charging consumers,
Defendants allegedly enrolled consumers in negative option
continuity plans, charging consumers on a monthly basis.
All this, plus they purportedly and falsely represented that
their business was accredited by the Better Business Bureau with an
"A-" rating.
The result: an expensive judgment, a permanent injunction and
years of record keeping and compliance reporting to the FTC.
This action, though describing practices that legitimate
marketers are not likely to employ, offers insights into marketing
techniques that can spell trouble to a regulator: placing important
disclosures in hard-to-read places; inadequately disclosing the
terms of a free trial or continuity program (see my earlier blog
post with
More Details about such programs); failing to get
consumers' consent to reoccurring charges; and making it
difficult for consumers to return products or reach customer
service reps.
The court order announced
today bars Argaman and Secured Merchants from engaging in deceptive
practices in connection with the promotion or sale of any good or
service, including failing to disclose clearly and conspicuously
material terms of offers, failing to obtain a consumer's
express informed consent before submitting billing information for
payment, and violating FTC's Telemarketing Sales Rule
(TSR).
This alert provides general coverage of its subject area. We
provide it with the understanding that Frankfurt Kurnit Klein &
Selz is not engaged herein in rendering legal advice, and shall not
be liable for any damages resulting from any error, inaccuracy, or
omission. Our attorneys practice law only in jurisdictions in which
they are properly authorized to do so. We do not seek to represent
clients in other jurisdictions.
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