Rosca: Protecting Consumers from Deceptive Online Sales

Merchants must provide clear, conspicuous, and understandable disclosures before obtaining consumer consent to charges. All material terms must be presented in a manner that is easy for consumers to review and understand. The disclosure must include the total cost of the purchase, including all charges, the frequency of billing, the cancellation policy, and the method for canceling the service. Failure to provide adequate disclosures constitutes a violation of ROSCA. Additionally, the consumer's consent to the negative option feature must be separate from their consent to the initial purchase, ensuring that consumers knowingly agree to recurring charges.

ROSCA requires that consumers provide express informed consent before any charge is made for a negative option feature. This means consumers must actively agree to the terms, not simply fail to object to them. The consent must be obtained through a clear and conspicuous mechanism, such as a checkbox or confirmation button. Pre-checked boxes or unclear consent mechanisms do not satisfy ROSCA requirements. Businesses must maintain records demonstrating that proper consent was obtained, as this documentation is critical for defending against ROSCA claims and regulatory investigations.

Businesses frequently violate ROSCA by implementing dark patterns that make cancellation difficult, charging consumers multiple times for the same service, or failing to honor cancellation requests promptly. Other common violations include billing consumers after they have explicitly canceled their subscription or failing to maintain adequate records of consumer consent. The FTC can impose civil penalties of up to forty-three thousand dollars per violation. Additionally, state attorneys general may pursue separate enforcement actions under state consumer protection laws, resulting in additional fines and remedies. Consumers may also file private lawsuits seeking damages, which can accumulate quickly when violations affect thousands of customers.

ROSCA requires that businesses provide consumers with a simple mechanism to cancel their subscription or negative option feature. The cancellation process must be as easy as the enrollment process, and consumers must be able to cancel through the same method used to enroll. Businesses must honor cancellation requests immediately and cease all charges once a consumer has canceled. If a consumer cancels their subscription, the business cannot continue charging them or attempt to collect outstanding amounts through other means. Consumers who have been charged in violation of ROSCA have the right to seek refunds and may pursue legal action against the merchant.

Maintaining thorough documentation is essential for ROSCA compliance and for defending against potential claims. Businesses must keep records of consumer consent, including the date and method of consent, the terms disclosed, and proof that the consumer agreed to the negative option feature. These records should be retained for at least three years to satisfy regulatory requirements and potential litigation discovery requests. Additionally, businesses should document their cancellation procedures, including the date cancellation requests were received and the date charges ceased. This documentation demonstrates good faith compliance efforts and provides evidence that the business acted lawfully.

Creating a straightforward cancellation process is critical for ROSCA compliance. Consumers must be able to cancel through the same channel used for enrollment, whether that is online, by phone, or through email. The cancellation process should not require consumers to navigate multiple steps or provide excessive information. Businesses should implement systems that immediately process cancellations and prevent further charges from being processed. ROSCA compliance requires that businesses honor all cancellation requests within one business day and provide consumers with written confirmation of their cancellation. Regular testing of cancellation systems helps ensure they function properly and process requests in a timely manner.

Consumers who have been charged in violation of ROSCA may recover actual damages, which represent the money they were illegally charged. Statutory damages under ROSCA provide for recovery of up to forty-three thousand dollars per violation, even if actual damages are lower. This provision incentivizes consumers to pursue claims and allows for meaningful compensation. In class action lawsuits, settlements have resulted in millions of dollars in consumer restitution. The availability of attorney's fees and costs further encourages litigation against ROSCA violators, as plaintiffs' attorneys can recover their legal expenses from defendants.

The Federal Trade Commission and state attorneys general actively investigate ROSCA violations and pursue enforcement actions against merchants. Recent settlements have resulted in significant monetary penalties and injunctive relief requiring businesses to reform their practices. Many settlements include requirements that businesses implement compliance programs, obtain third-party audits of their practices, and provide consumer refunds. These enforcement actions serve as deterrents to other businesses and demonstrate the serious consequences of ROSCA violations. Consumers should report suspected ROSCA violations to the FTC or their state attorney general to support regulatory enforcement efforts.