The Attorney General offices from the states of New York, Pennsylvania and Washington entered into a $1 million settlement with Internet Order LLC, doing business as Pimsleurapproach.com, over its use of 'negative option' marketing in the sale of Pimsleur-branded language audio courses over the Internet.
The complaint alleged that the company and its owner, Dan Roitman, failed to clearly disclose the correct terms surrounding the purchase of a language course advertised as "only $9.95." Internet Order LLC markets and sells online Pimsleur-branded foreign language-learning audio courses licensed by Simon and Schuster, primarily through its Internet website www.pimsleurapproach.com. The company advertises the audio courses for "only $9.95." The complaint alleged that upon signing up for this offer, the purchaser was enrolled in a "negative option plan," obligating the consumer to receive up to four additional audio courses at a cost of $256 per course. Thus, while the consumer thought the total obligation was "only $9.95," his or her obligation was as high as $1,024.
Under terms of the enforcement action, Internet Order must:
- Clearly disclose the terms of any negative option sale, and must get consent from consumers before obligating them to the terms of the sale
- Repeatedly notify consumers of the terms of a sale
- Allow consumers to easily and effectively cancel an ongoing subscription in a negative option plan
- Never charge any fee for the return of an item during a "free trial" period
The enforcement action requires Internet Order to pay back over $1 million in restitution to consumers nationwide.
This case serves as an important reminder that it is imperative to get proper consent from consumers before enrolling them in a negative option.
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