Markets Wired

An operation that offered “free trials” of its herbal products, including smoking cessation patches, has agreed to halt its allegedly deceptive practices, pending trial. The Federal Trade Commission sued, alleging that the trials weren’t free, the patches didn’t work as claimed, and the operation was illegally debiting consumers’ bank accounts without their authorization. The defendants have now agreed to abide by a federal court order that bars them from making deceptive claims, restricts their ability to dissipate assets, requires them to preserve records and other evidence, and account for the money they made from their venture.

According to the FTC, NextClick Media operates several Web sites that offer “free” 10- day trials for their products, including herbal stop-smoking patches called “Nicocure,” “Stop Smoking 180,” and “Zero Nicotine.” They advertise that consumers will only pay for shipping and handling with ads in large type that say “FREE 10-Day Supply plus shipping and handling,” and “TRY IT FREE.” Consumers who want to try the “free trial” provide a credit or debit card to pay for the shipping charge. But, the FTC alleges, the trials weren’t free. Consumers weren’t sent a 10-day trial size package. They were sent a 30-day supply and had to pay for all 30 days of product if they chose to keep it. Consumers who chose to return the unused product paid postage and were assessed a $7.95 restocking fee, neither of which was disclosed adequately by the sites.

The agency also alleged that the operators failed to disclose adequately that consumers who signed up for the free trial were agreeing to be enrolled in a continuity program and would be automatically billed monthly charges of up to $99.95 until they cancelled. But, the operators deliberately misled consumers into believing they would not be automatically enrolled. Statements on their Web site claimed, “Your 10 day trial is absolutely free! Charges will only be made to your credit card if you find that StopSmoking180 is the product for you and you choose to continue with the stop smoking 180 program for a discounted membership price.”

According to the complaint, the operators claimed that consumers “can cancel any future orders anytime, risk free in order to not incur any charges on future orders.” But consumers found that cancelling was difficult or impossible. For example, the operation requires that consumers return the unused portion of their order to cancel the program they didn’t know they were enrolled in. To return the unused portion, consumers are required to obtain an “RMA” number from the operation. Consumers who tried to call “customer service” at the phone number posted on the Web sites usually got a voice message saying the mailbox was full or, if they could leave a message, never received a reply. Consumers who tried to get their RMA number from the member section of the Web site used user names and passwords provided by the site. They didn’t work. Consumers who e-mailed asking for correct user names and passwords did not receive a response.

The operation claimed its herbal smoking cessation patches work better than nicotine patches and “have a 97% success rate.” There is no substantiation for their claims.

The FTC charges that the misrepresentations about the costs associated with the “free” trial, the failure to disclose material facts, the unauthorized billing of consumers credit cards, and the false claims about the smoking cessation patches violate the FTC Act. Withdrawing funds from consumers’ accounts without their authorization also violates the Electronic Fund Transfer Act.

The defendants – NextClick Media, LLC, a Delaware company doing business as StopSmoking180.com, StopSmokingResolution.com, BeautifulSkin.com, and OnLineDirectProducts; Next Internet, LLC; Kenneth Chan; and Albert Chen – have now agreed to halt the practices. No trial date has yet been set.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of California, San Francisco Division.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.