The Importance of Disclosure

By Richard Parkin

No one likes to see an unexpected charge on their bank statement. It’s one of the areas that can give Direct Response marketing a bad name – a buyer suddenly discovers that their purchase isn’t a one-off, but has been charging them monthly since they paid. 

Over time (particularly since the passage of ROSCA in 2010), the law around disclosing terms and conditions has become clearer and clearer for eCommerce sellers. Despite that, many are still falling short of their legal obligations towards their customers.

This blog is all about some of the essential points for disclosure – what you have to do, what you can’t do, and what you should likely consider. This isn’t legal advice or comprehensive – it’s a starting point for building a compliant but successful offer.

Six Essentials for Disclosure

Whenever you sell online, you’re required to follow certain regulations, or may face action from the FTC (or a similar agency). While many of these regulations (cookie information, visible privacy policies/ terms & conditions) affect all eCommerce retailers, several of them are far more relevant for Direct Response retailers.

Below, we’re exploring 6 of those essential points:

1: Providing Accurate Information

First and foremost, your customers need to know exactly what they’re signing up for, before they agree to put a single cent down. If anything in your terms and conditions or privacy policy is incorrect, now’s the time to get it fixed.

Even more important, if there’s any incorrect or outdated information in your adverts, order forms, or the like, get this fixed immediately. If you’ve transitioned from offering free shipping to charging, for example, some of your old adverts may still reference free shipping, unintentionally misleading customers about what you’re offering.

If you’re a single entrepreneur, or have a small team, it’s very easy to build an incorrect understanding of what your customers know about the products and services you offer. Try to get someone outside your organization to give you feedback – after reading your marketing, do they have an accurate understanding of your offer, and what it’s going to cost them?

2: Explicit Consent for Continuity and Email

If you’re planning on billing more than once (for a monthly subscription, or similar), you need to ensure that customers actively choose to accept that billing model. Typically, this means having a checkbox with some clear text: ‘I understand that I will be charged $20 monthly for this service’ or similar.

It’s about getting the customer’s explicit consent to charge their card on a recurring basis, making it clear that you’ll be charging them a certain amount on a certain schedule. It means removing that uncertainty, protecting both your customer and your business.

Similarly, if you plan to send out marketing emails, you need to explicitly get that consent from your contacts. Have them explicitly agree to receive marketing emails, and you’ll be in a far stronger position.

3: Easy Opt-Outs

This one may be a surprise if you’ve ever tried to unsubscribe from certain digital services. According to the FTC, businesses should ‘provide cancellation methods that are at least as easy to use as the method the consumer used to buy the product or service in the first place’. 

There may be some flexibility in interpretation here. If you’ve ever tried to cancel a Shopify or Amazon Prime membership, you’ll likely have seen several more screens, unclear button text, and general difficulty than you had getting your membership set up. However, making it easy to cancel a recurring order isn’t just a positive in the FTC’s eyes – it’s going to significantly help you cut back on chargebacks. 

It’s certainly reasonable to try and save the sale by offering a discount or similar incentive for people requesting refunds – you just need to make it easy for the customer to refund their purchase. 

4: Useful Billing Descriptors

This one isn’t exactly a legal requirement – it’s more of a way to cut down your chargebacks and keep your customers satisfied. 

A billing descriptor is a short (20-25 character) string of text that shows up on someone’s account once they’ve made a purchase of some kind. This should generally give context for the purchase. In most cases, it’s just going to be the company’s trading name, which is good enough for most eCommerce sellers.

In direct response, however, most of your customers may never have heard of your trading name. They’ve heard of your offer, and that’s what they’re expecting to see on their statement. Make sure your billing descriptor (wherever possible) is fully aligned with your offer’s name, and you’ll typically improve your chargeback rate.

5: Obvious Information

People aren’t going to read the small print. If you don’t mention your monthly fee until paragraph 20, section IX of your terms and conditions, don’t be surprised if the FTC asks why you’re not giving buyers accurate information about what they sign up for.

You need to disclose information quickly, accurately, and in a reasonable location – typically the order form, so the customer can review the information as they place their order. Check how your disclosure appears on mobile and tablet – you need to ensure that every one of your customers is shown the relevant information before they can purchase.

6: Full-Stack Compliance

It’s not just your website that needs to provide customers with all relevant information about their purchase. You need to ensure that your marketing and customer service teams are completely up to speed about your terms. 

As with most compliance issues, any statement from your CS team to a potential customer is marketing material, and this legally needs to be fully accurate. 

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