Florida Statute Chapter 501 Part II and Online Negative Option Features

ANDREW WILLARD — Florida Statutes Chapter 501, Part II, Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”) is the main weapon the Office of the Attorney General (“OAG”) wields when protecting consumers and businesses from fraud stemming out of commercial activities within the State of Florida. FDUTPA, in short, provides the OAG with the ability to enforce Section 5(a) of the Federal Trade Commission Act on the state-level. Specifically, the OAG uses the broad definitions of “unfair” and “deceptive” acts as provided in Section 501.204, to enforce the Consumer Protection laws of Florida to their fullest extent.  One of the largest concerns of the OAG at this moment is the abundance of online businesses offering negative option features to consumers without adequately disclosing the material terms of the features. Pursuant to Section 501.204, the OAG has deemed this inadequate disclosure a violation of FDUTPA.

A negative option feature is defined as “a category of commercial transactions in which sellers interpret a customer’s failure to take an affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services.”  While the FTC and the OAG recognize that negative option features are not per se violations of federal and state law, they become violations when consumers are not adequately warned of their existence. Moreover, negative option features become violations when businesses attempt to keep the material details of the feature hidden from consumers by disguising the negative option language as a one-time charge or a free trial offer without expressly informing consumers that they will be charged in the future.

One case from the Central District of California is commonly cited when the courts discuss negative option features. FTC v. Commerce Planet, Inc., provides a prime example of what the courts require to be included with an online business’s negative option feature.  The key factors the court uses when determining whether a website adequately discloses its negative option feature are: 1) whether a sites landing page and billing page would confuse consumers into believing they were receiving a free trial item; 2) whether the terms of the negative option are disclosed in a separate hyperlink page or pop-up window; 3) whether the site gives an overall net impression of what the product is and who the supplier is; 4) whether the “Terms and Conditions” are in close proximity to the submit payment button; and 5) whether the terms of the negative option feature are buried within other densely packed information and legalese, which could confuse an average consumer.

Under its authority pursuit to Section 501.204 the OAG has begun targeting online businesses that are seeking to profit off of unsuspecting consumers. The OAG has the power to seek injunctive relief from the courts in order to make sure that these deceptive websites can no longer operate until they adequately disclose the terms of their negative option features. Although the OAG does not want to damage online businesses, the OAG does want to make sure that consumers are protected from deceitful business practices.

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