Online Shoppers’ Confidence Act affects recurring billing

S. 3386: Restore Online Shoppers’ Confidence Act targets two ecommerce problems. One problem is sending consumer card data to third parties after the sale, for the purpose of an additional sale from another company, typically for a recurring billing item. The second issue addresses opting out of recurring billing purchases made online. This article addresses the second part.

Excerpt from Text of S. 3386: Restore Online Shoppers’ Confidence Act

(c) Limitations on Use of Negative Option Feature in Internet-Based Sales Transactions- It shall be unlawful for any person to charge or attempt to charge any consumer for any goods or services sold in a transaction effected on the Internet through a negative option feature, unless–

(1) before obtaining the purchaser’s initial agreement to participate in the negative option plan, the seller has clearly and conspicuously disclosed all material terms of the transaction, including–

(A) the name of the entity offering the goods or services;

(B) a description of the goods or services being offered;

(C) the cost of such goods or services;

(D) notice of when billing will begin and at what intervals the charges will occur; and

(E) the length of any trial period, including a statement that the consumer’s account will be charged unless the consumer takes affirmative action and the steps the consumer must take to the avoid the charge;

(2) the seller has obtained the express informed consent described in subsection (a)(2) from the purchaser before charging or attempting to charge the purchaser’s credit card, debit card, bank account, or other financial account on a recurring basis;

(3) the seller enables the purchaser to stop recurring charges from being made to the purchaser’s credit card, debit card, bank account, or other financial account through a simple process that is available via–

(A) the Internet; and

(B) telephone; and

(4) not less than 10 days prior to the initiation of each charge to a purchaser’s credit card, debit card, bank account, or other financial account, the seller has sent the purchaser an e-mail (at an e-mail account provided by the consumer) that clearly and conspicuously discloses–

(A) that a charge will be made to the consumer’s credit card, debit card, bank account, or other financial account;

(B) the amount of the charge and a description of the goods and services for which the consumer will be charged; and

(C) instructions for stopping recurring charges in accordance with the requirements of paragraph (3).

END EXCERPT

In my opinion, some form of this legislation is likely to be approved and merchants should prepare for it.

Here’s an example of a common business recurring billing charge:

Thank you for your payment. Here is your receipt as requested for YOURDOMAIN.com.

Please note that a payment made by credit card will show as paid to  ISP HOST COMPANY on your credit card statement.
Billing Address

YOUR NAME AND ADDRESS
Payment Information
Total Payment Amount: $8.57

Payment Method: MasterCard – CC#5XXXXXXXXXXX1234
Payment Date: 6/10/2010 Paid Through: 7/10/2010.
Plan Fee – 6/10/2010 to 7/10/2010 – $7.95
Domain [mydomain.com]
Account Billing can be accessed from www.ispdummyhost.com
Click on “Billing Admin” from the “Customer Admin/Billing” menu.

If you have any questions regarding this receipt or have billing questions in general, please send an email to service@ispdummyhostingcompany.com.

ISP HOST COMPANY

1234 holiday lane.
Anywhere USA AZ 12345
1-888*123-1234

If legislation is approved:

The biller will need to notify the customer 10 days in advance instead of just sending a receipt for the purchase. This means TWO emails will need to be generated. One before the sale and one after with the receipt.

Additionally, some language changes may be needed to be perfectly clear:

BILLING CYCLE: MONTHLY
BILLING DATE: 10th of month
CANCELLATION: To cancel your service, please login to your account or call 888*888*8888.
Account Billing can be accessed from www.isphost.com
Click on “Billing Admin” from the “Customer Admin/Billing” menu.

If you have any questions regarding this receipt or have billing questions in general, please send an email to customerservice@isphostingcompany.com.

Article reference:

Rockefeller Introduces Bill to Ban Misleading Internet Sales Practices Uncovered By E-Commerce Investigation

Restore Online Shoppers Confidence Act