Why Congress Is Pressuring Trial Offers

By Richard Parkin

As one of the most rapidly developing forms of marketing, Direct Response campaigns often move ahead of regulation, leaving regulatory and legal bodies with no choice but to catch up later down the line. 

While the relatively slow development of law prevents a more proactive approach, changes to marketing regulations can still leave Direct Response businesses in a difficult position, suddenly needing to adjust their business models overnight in order to accommodate for unexpected legal changes – or potentially receiving surprise lawsuits about completely unnoticed new regulations. 

In this blog, we’re taking a look at one of the most overlooked and misunderstood regulations for Direct Response- the Restore Online Shoppers’ Confidence Act (ROSCA).

Understanding ROSCA for Direct Response

As the act’s name suggests, ROSCA was designed to provide online shoppers with a greater level of security, removing some frequently abused financial provisions, and requiring marketers to provide a greater level of disclosure about the terms and conditions applying to their offers.

A fairly wide-ranging act, ROSCA prohibits several major sales practices, including the following:

Undisclosed Terms/ Conditions: Customers now must be made fully aware of any key terms and conditions for the transaction that they’re about to complete. While marketers may not be obligated to explain minor technical details, they are required to disclose comprehensive information about payment terms, contract length, service availability and similar. 

This prevents merchants from hiding key information in the small print – you can’t advertise a ‘free trial’ for one product, but then note in the terms and conditions that the user is obliged to buy a second, full-price product to claim the trial, for instance. 

Unexpected Memberships: Expanding on the above, marketers cannot automatically enroll buyers into a membership with recurrent billing of any kind, unless they acquire explicit, opt-in, and proactive consent from the user (again with full disclosure of all terms).

Unstoppable Subscriptions: Along with applying unexpected memberships, many marketers have historically made it extremely difficult/ impossible for users to cancel their unwanted memberships. ROSCA forbids this, requiring marketers to offer simple, quick cancellation options.

While marketers aren’t necessarily obligated to make cancelling a membership as simple as a single click (consider how companies like Amazon require users to go through screen after screen of requests), it’s worth being wary here. Every level of difficulty added to your cancellation process increases your risk:  if your process is overly difficult, customers aren’t going to decide to keep paying – they’re going to issue a chargeback request.

Despite being passed in 2010, many marketers still haven’t adjusted to the act, and prosecutions are far from rare. In 2019, as an example, the FTC fined noncompliant companies over $100 million for misleading customers. 

Finding that the company in question offered buyers a ‘free trial’, before signing them up to an undisclosed, automatically-billing subscription, the FTC demanded an immediate turnover of assets, banned the defendants from operating any similar business, and issued vast-scale fines. 

In other words, compliance with ROSCA is absolutely essential, particularly within Direct Response, where many marketers still run completely non-compliant marketing, unfairly charging customers while risking immediate shutdown. 

Potential Regulations for Direct Response

Of course, ROSCA wasn’t the first or last legal change to affect Direct Response. An ongoing case aims to challenge one of the most common and effective Direct Response practices: using a countdown timer at checkout. 

Designed to motivate customers to buy by telling them that their opportunity to purchase is rapidly coming to an end, countdown timers often vastly increase conversion rates.

The suit alleges, however, that the use of countdown timers is an unfair marketing practice, with the countdowns typically not reflecting any real product scarcity or expiration. 

While the case is still being reviewed, it’s fair to say that the vast majority of Direct Response marketers should be paying attention to what’s going on. If the case rules against countdown timers, marketers will need to act fast to resolve the issue, while a successful defence should allow marketers to better understand how countdown timers can be used across their offers.

Either way, we’ll be updating our subscribers as soon as the case concludes – sign up to the Shockwave mailing list to be the first to hear!

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