FTC takes action against companies auto-enrolling customers in subscriptions

The Federal Trade Commission (FTC) has announced a crackdown on stores practising negative option marketing. These stores are accused of enrolling consumers in recurring payment plans for personal care products without their explicit consent.

A complaint unsealed by a U.S. district court in central Florida details accusations against two connected groups of defendants, alleging nationwide consumer fraud. 

According to the FTC, these defendants lured consumers to their site with ads for “free” CBD and Keto-related products, then charged them for items they hadn’t agreed to purchase, enrolled them in unwanted continuity plans, and withdrew money from their bank accounts without prior authorisation.

Additionally, some defendants are accused of using straw signers to establish bank accounts for shell companies and facilitating the laundering of credit card payments. 

The Legion Media defendants are alleged to have operated two unauthorised billing scams. In one scheme, they marketed products purported to aid in weight loss, clear skin, or other health benefits, only to charge consumers more than advertised and enrol them in continuity plans without their consent.

The other alleged scheme involved sending out business impersonation emails and messages, offering a “free” gift for a small shipping fee. However, once consumers paid the fee using their credit or debit cards, they faced recurring unauthorised charges from these fake companies.

Sloan Health is implicated in the scheme for its role in creating and shipping deceptively marketed personal care products. The complaint says that Sloan Health collaborated with Legion Media, labelling and distributing the products while handling customer returns. 

The profits were shared, and the products were distributed under the generic name “Fulfillment Center” with a post office box address in Smyrna, Tennessee, to obscure their identity from consumers.

In a statement, the FTC said: “These defendants bilked consumers out of millions of dollars by repeatedly charging them for products they never ordered or agreed to purchase. The FTC is committed to aggressively pursuing companies and individuals involved in these unauthorized billing scams.”