Markets Wired

A nutritional supplement marketer called NutraClick has agreed to settle FTC charges that it lured consumers with “free” samples of supplements and beauty products and then violated the law by charging them a recurring monthly fee without their consent.

According to the FTC’s complaint, NutraClick did not clearly disclose that people who ordered sample products would be enrolled in a membership program and be billed from $29.99 to $79.99 every month, depending upon the product, unless they canceled within an 18-day trial period. At least 70,000 people filed complaints about the operation. The company netted tens of millions of dollars from the unauthorized recurring charges, the FTC alleges.

NutraClick’s brands, including Force Factor, Peak Life, ProBioSlim, SomnaPure, VolcaNO and Stages of Beauty, are sold on the company’s websites, where the illegal sign-up process was conducted, and in stores such as Walgreens, Walmart, CVS and GNC.

The stipulated order requires NutraClick to change its billing practices and prohibits the company from misrepresenting the cost of a product or service and falsely implying that offers are free when consumers will be charged. Regarding sales with a negative-option feature, NutraClick is barred from:

• obtaining consumers’ billing information without first disclosing that there will be a charge, or that the charge will increase after a trial period, and, if applicable, that charges will be on a recurring basis unless consumers cancel, as well as the cost or range of costs and the deadline and method for cancelling;
• failing to send consumers, within 10 days, confirmation of a sales transaction with clear disclosures required in the court order;
• using consumers’ billing information to obtain payment unless it has first gotten consumers express written authorization; and
• failing to provide a simple way for consumers to avoid being charged and to cancel.

The order also prohibits the company from violating the Restore Online Shoppers’ Confidence Act, and requires it to turn over $350,000 in ill-gotten gains.

The Commission vote to authorize the staff to file the complaint and proposed stipulated order was 3-0. The U.S. District Court for the Central District of California entered the order on September 21, 2016.

NOTE: The Commission authorizes the filing of 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. Stipulated orders have the force of law when approved and signed by the District Court judge.

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