"Free Software" Scammers To Pay $2.2 Million

The company Think All Publishing has reached a settlement with the FTC in which the “free-software” scamming company will pay $2.2 million for consumer reimbursement, according to NetworkWorld. The scammers offered free software CDs and then billed unsuspecting customers for a continuity program which was unwittingly ordered by checking a “terms of use” box. Details, inside…

The article says,

The “terms of use” detailed computer software licensing arrangements and usage rules, and many consumers checked the box without clicking on the hyperlink or reading the form.

But buried in the seventh paragraph of the single-spaced document was language that contradicted the free software claim. It stated that consumers would be required to send back two of the four “free” CDs within 10 days or they would be charged a fee of $39 to $49. It also stated that consumers would be enrolled in a software continuity program, would receive additional CDs in the future, and would be charged $39 to $49 for those CDs unless they returned them within 10 days, the FTC said.

The FTC alleged in its complaint that most consumers did not know about these charges or the continuity plan until they were billed. According to the agency, because the defendants did not adequately notify consumers, they could not avoid the charges.

The FTC charged the defendants with unfair and deceptive practices that violate the FTC Act. The agency also charged them with violating the Unordered Merchandise Statute, which prohibits billing recipients for merchandise they did not order.

The settlement bars the defendants from making misrepresentations, including misrepresenting that items are “free” when they aren’t. It requires that the defendants disclose all the terms and conditions of any negative option offer. It bars the defendants from charging consumers for products or services without their consent, and without first disclosing the terms of any refund or cancellation policy.

The settlement also prohibits the defendants from sharing their customer lists, and contains bookkeeping and record keeping provisions to allow the agency to monitor their compliance. Finally, under the terms of the settlement, the defendants will pay approximately $2,167,500 in consumer compensation.

Kudos to the FTC. We hope this sends a clear message to the countless companies who continue to make use of this shady business practice. There are always those people that will refute, “You should read what you are signing!” which is true. But, when a company buries a clause deep in their “terms of use” that completely contradicts the spirit of the advertisement, (e.g. Free software) it is unethical, period.

“Free software” scammers out $2.2 million