FTC Returning $1.1 Million to Consumers After 'Free Trial' Settlement

The Federal Trade Commission (FTC) is returning $1.1 million to consumers who were charged for deceptive “free trial” offers.

This move is the result of a settlement announced in 2018 between the FTC and RevMountain, LLC; Anasazi Management Partners; and 59 related corporate defendants, the FTC said in a Tuesday (April 25) press release.

The FTC had sued the defendants in 2017 alleging they had charged consumers for deceptive “free trial” offers for tooth whiteners and other trial products, the release said.

In its lawsuit, the FTC alleged the companies had told consumers they would be charged only a small fee for the trial products but then charged them for ongoing subscriptions until the consumers canceled, per the release.

“As a result, consumers who believed they had bought a single trial product for about $5 were charged without their knowledge approximately $200 a month until they canceled both subscriptions,” the FTC said in the release.

The FTC is now sending 41,934 checks to consumers who were deceived by the defendants, according to the release.

This announcement comes about three months after another federal regulator cautioned companies that they must not trick people into paying for subscriptions they don’t want.

The Consumer Financial Protection Bureau (CFPB) issued a guidance in January that focused on “negative option” subscription services, which are those that automatically renew unless the consumer cancels, or that start with a lower fee and then automatically shift to a higher one.

“Consumers shouldn’t have to jump through hoops to cancel subscriptions they don’t want, and they shouldn’t have to worry about a trial marketing offer turning into an unwanted monthly charge,” CFPB Director Rohit Chopra said at the time. “The CFPB has made it clear that misleading consumers about products or subscription services they don’t want is not only dishonest, but a violation of the law.”

PYMNTS research has found that unexpected fees are one of the most common sources of consumers’ subscription-related frustration.

Unexpected fees often happen when a free trial turns into a paid subscription without the customer realizing, when a customer simply forgets about a subscription and when a customer signs up accidentally, according to the “Subscription Commerce Tracker®,” a PYMNTS and Vindicia collaboration.