An online stamp service to pay fine for failing to disclose fee based service
An online postage stamp service will pay $2.5 million in penalties for false and misleading advertising, settling a consumer lawsuit brought by the Santa Clara and Santa Cruz District Attorney’s offices.
Stamps.com – which is headquartered in California – charges its customers a monthly service fee to purchase stamps online and print them out on their computers. The company offered a no-risk trial without “clearly and conspicuously” disclosing that at the trial’s end, consumers were automatically enrolled in their fee-based monthly service.
“The law seeks to make sure consumers are protected and avoid hidden costs of an automatic enrollment or subscription service,” prosecutor Francisca Allen said. “Sometimes such services are difficult to get out of. Sometimes people don’t even notice they are paying for the service at all.” California law requires that such disclosures are “clear and conspicuous” so consumers are informed of all the terms and conditions before they agree.
This notification on their homepage appears to comply with the court order. Customers would also need to be notified directly before their paid subscription begins.
There are also other scams ranging from the sale of performance enhancement vitamins to skin creams and products. If the real price of the product is not clearly displayed in the seller’s advertisement, you may be looking at an online scam. Because these companies are not required to regulate their products through the Federal Drug Administration, and or state regulators, the market price of these products may vary widely, even when they are licensed to sell in the United States.
Deputy District Attorney Allen noted that Stamps.com has made appropriate efforts to resolve the issue as quickly as possible once it was notified of the D.A.’s investigation.
In addition to the penalties, Stamps.com has agreed to make available up to $1.5 million in restitution to misled California customers and make changes to its website so that the details of its trial are prominent and easy to understand.
