Virtual Assistant Marketing Mentor

You see the promotional ads on the Internet: “Free 1 month trial” or “Free CD – just pay S/H only.” You say to yourself, “What an awesome deal! I can kick the tires first.” So you sign up for this supposed free trial only to find out the following month that your credit card is being charged $49 for a membership site you do not remember signing up for.

These types of “continuity programs,” which are known as “negative option plans,” are those that automatically bill your credit card on a recurring basis until you cancel your membership. This is not new. For years now, internet marketers have used this tactic (quite effectively) as a way of luring subscribers to recurring billing programs. Most of the ones I have seen use an honest approach with full disclosure, but I’ve also seen many marketers use slimy techniques.

Last year, the Federal Trade Commission announced that it would re-examine the rules pertaining to negative options after decades of no revisions to the initial rules established in 1973. What came from that was the report, “Negative Options: An FTC Workshop Analyzing Negative Option Marketing,” which provides five principles as a guideline for marketers to help them avoid deception in making negative option offers.

• Disclosing material terms in an understandable manner, without making them unnecessarily long or inconsistent
• Making the disclosures clear and conspicuous by placing them where consumers are likely to look on Web pages, by labeling disclosures (and links to them) to indicate their importance and relevance, and by using easy-to-read fonts and colors
• Disclosing the offer’s material terms before the consumer incurs a financial obligation
• Getting consumers’ affirmative consent to the offer by, for example, having them click “I Agree” and without relying on pre-checked boxes
• Not impeding the effective operation of promised cancellation procedures and honoring cancellation requests that comply with such procedures

Ok, sounds easy enough to comply with, right?

But then came the Visa/MasterCard crackdown earlier this year and hundreds of marketers were shut down, some with no notice at all. This had a huge effect on marketers, even those who are in compliance with the FTC guidelines.

You may have received a letter that included the following, “…both Visa and MasterCard are taking action in response to increases in consumer disputes related to card-not-present and direct response products and services.” And went on to inform you that the merchant could not receive applications from members who use “Marketing models that employ ‘Free-Trial,’ ‘Deferred Billing’ and/or ‘Shipping Only’” among others.

In short, the days of “free trial” or “risk free trial” are over unless you truly are offering something for free (and NOT asking for credit card information). Also, the shipping and handling offers must be fair, accurate, and reasonable; trial offers must be extended for a minimum of 10 days; and trial periods should not begin until the product is shipped to the consumer.

As hundreds of internet marketers will tell you, your membership website will be scrutinized by your merchant account if you:

- Have a free + shipping offer or trial offers
- Offer a continuity program where the radio button is checked by default

Basically, the rule of thumb here is “be transparent, be very transparent.” If you are doing business above board and following the rules, you don’t have much to worry about. But if someone is touting marketing methods that teach ways to circumvent the rules, look elsewhere – there are a lot of truly ethical marketers out there who don’t have to resort to underhanded practices that you can learn from.

References and recommended reading:

Dot Com Disclosures: Information About Online Advertising, Federal Trade Commission

Forced Continuity Meltdown: Is Your Merchant Still in Business?

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