CONGRESSWOMAN ELISE STEFANIK
S. 3386 is expected to be considered on the floor of the House on Wednesday, December 15, 2010, under a motion to suspend the rules, requiring a two-thirds majority vote for passage. The legislation was introduced on May 19, 2010, by Sen. Rockefeller (D-WV). The Senate approved the bill on December 1, 2010, by unanimous consent.
S. 3386 would prohibit, in most cases, any third-party seller from charging or attempting to charge a consumer, after an initial transaction, for any good or service sold over the Internet. The bill defines a third-party seller as a vendor that offers a good or service to a consumer after the consumer has completed a transaction with a different Internet merchant.
Prohibition of "Data Pass" Process: The bill would prohibit the use of the “data-pass process”. Third-party sellers that engage in post-transaction sales would be required to clearly disclose their product and terms of any agreement to the consumer. This bill requires third-party sellers create a process for the consumer to re-enter personal and financial information, before any transaction could be completed.
Prohibition of "Negative Response": The bill prohibits, in most cases, third-party sellers from using a “negative response” or opt-out tactic as defined by the Federal Trade Commission (FTC). Sellers that engage in this practice would be required to provide a form that discloses all the terms of any agreement, obtain expressed consent from the consumer, and provide a simple way for the consumer to cancel ongoing charges or subscription fees.
Enforcement: The bill would treat any violation as an unfair or deceptive act and practice under the Federal Trade Commission Act. These violations of the FTCA could result in a fine of $10,000 per violation, in addition to civil action taken by the FTC. Additionally, the bill would provide a right of action to states to enforce and prosecute any violation of the bill that occurs within their borders. A state attorney general would be permitted to take civil action against a third-party seller should the official deem it necessary.
Consumer complaints have surfaced surrounding the use of a "data-pass process" that allows e-commerce and online sales companies to forward personal financial information, including credit card numbers, to post-transaction third-party sellers. A post-transaction sale is when third-party sellers insert sales offers into the transaction process of a primary seller.
Certain companies have allowed third-party sellers to exploit their transaction process in exchange for a payment of $10 to $30 for each customer that accepted a third-party sales offer. Third-party offers are usually ongoing subscriptions that require consumers to affirmatively opt out or provide what is known as a "negative response." These types of agreements interpret a customer's silence or inaction to reject goods or services or to cancel an agreement as acceptance of the offer.
The Congressional Budget Office (CBO) estimates that implementing the provisions of S. 3386 would not significantly increase spending subject to appropriation. The bill could increase revenues from the collection of civil penalties, but CBO estimates that collections from those penalties would be negligible.