PUBLIC AFFAIRS PERSPECTIVE SPRING 2010

Public policy insight for your business



Several states propose restrictions on free trial offers

In response to consumer complaints about deceptive offers, state legislators and consumer protection officials have sought to impose onerous restrictions on free trial offers and automatic contract renewals.  So far this year, 19 state legislatures are considering 28 different pieces of legislation aimed at free trial offers.

While legitimate free offers allow consumers to receive valuable products and to learn whether they might like a new product or service on a risk-free basis, offers that are marketed in a deceptive manner are prohibited under current law. Still, state policy makers have focused on restricting organization’s ability to offer free trials online.    
For example, the Maine legislature is likely to pass a bill that would restrict the use of pre-acquired account information for free trial offers where the seller does not obtain the account information directly from the consumer. Other states, like Oregon, would prohibit early termination fees and increase the number of notices businesses must give before charging for a consumer’s account.

Rather than increasing the current enforcement of consumer protection laws, state policy makers will place restrictions that could raise the cost and complexity of free trial periods. It is important for any products or services to clearly disclose the material terms and conditions, but states should not categorically prohibit or overly regulate offers that provide value to consumers.



 

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