'Free' internet auction kit anything but: FTC
Last Updated: Thursday, November 19, 2009 | 2:17 PM ET
CBC News
An online marketer of "free" internet auction kits settled Thursday with the U.S. Federal Trade Commission after allegations it was charging consumers almost $60 US a month without their knowledge.
Commerce Planet, its CEO Michael Hill and Aaron Gravitz, a former president of Legacy Media LLC, are required to pay just over $900,000 US. A $19.7-million judgment originally made against them in a California district court has been suspended because of their inability to pay.
The FTC investigated the company after complaints by consumers that they were being charged $59.95 a month for an "online supplier" program they had not signed up for.
The business worked like this, according to a commission news release. Commerce Planet offered consumers a free online auction kit that included information about how to start a business selling products on online auction sites such as eBay.
Commerce Planet claimed the kit would provide consumers with "an easily managed online business that has the potential to supplement, or even replace" their current source of income.
Consumers were led to believe they would be charged as little as $1.95 for shipping and handling for this "free" trial offer. They were required to provide their credit card information, and many were unwittingly signed up for the company's online supplier program.
The commission contends that over an 18-month period Commerce Planet failed to disclose that by registering for the "free offer" consumers also were agreeing to be enrolled in the online supplier program and would be charged a membership fee of up to $59.95 a month unless they cancelled within a few days of ordering.
However, the terms and conditions of the program, including information about the recurring $59.95 fee, were difficult to find on Commerce Planet's website.
The information appeared on a separate page from the trial offer and it could only be accessed by a link, or via the payment page. It was also below the bottom of the visible screen.
Most consumers did not even realize they had been enrolled in the online supplier program until their credit cards were repeatedly charged. Many people requested refunds but had difficulty reaching anyone from the website. Some people ended up contacting a lawyer or asking their credit card companies to reverse the charges.
