FTC targets 'free' trial offers from Canadian entrepreneur

17.05.2011
The U.S. Federal Trade Commission has filed a lawsuit against a Canadian entrepreneur and a group of Web-based businesses that promised customers free offers, but allegedly raked in more than US$450 million by then charging for products and services they did not purchase.

The 10 Web businesses, controlled by 24-year-old , touted free trials or risk-free offers on several products, including acai berry weight-loss pills, teeth whiteners, health supplements, work-at-home opportunities, access to government grants, free credit reports and penny auctions, the FTC said in a press release.

Customers in the U.S., U.K., Canada, Australia and New Zealand were lured in by the free trial offers, the FTC said.

Willms and his companies obtained consumers' credit or debit card account numbers through the promise of free or risk-free trial offers, the FTC said. Customers had "no reason to believe" they would be charged for the trial product or extra bonus products, but they were often charged for the supposedly free trial, plus a monthly recurring fee, typically $79.95, the FTC said.

"The defendants used the lure of a 'free' offer to open an illegal pipeline to consumers' credit card and bank accounts," David Vladeck, director of the FTC's Bureau of Consumer Protection, said in a statement. "'Free' must really mean 'free' no matter where the offer is made."

Willms and other defendants in the case allegedly contracted with affiliate marketers that used banner ads, pop-ups, sponsored search terms and unsolicited e-mail to lead consumers to the defendants' websites. The defendants "buried" important terms and conditions in fine print, the FTC alleged.