SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Restore Online Shoppers' Confidence 
Act''.

SEC. 2. FINDINGS; DECLARATION OF POLICY.

    The Congress finds the following:
        (1) The Internet has become an important channel of commerce in 
    the United States, accounting for billions of dollars in retail 
    sales every year. Over half of all American adults have now either 
    made an online purchase or an online travel reservation.
        (2) Consumer confidence is essential to the growth of online 
    commerce. To continue its development as a marketplace, the 
    Internet must provide consumers with clear, accurate information 
    and give sellers an opportunity to fairly compete with one another 
    for consumers' business.
        (3) An investigation by the Senate Committee on Commerce, 
    Science, and Transportation found abundant evidence that the 
    aggressive sales tactics many companies use against their online 
    customers have undermined consumer confidence in the Internet and 
    thereby harmed the American economy.
        (4) The Committee showed that, in exchange for ``bounties'' and 
    other payments, hundreds of reputable online retailers and websites 
    shared their customers' billing information, including credit card 
    and debit card numbers, with third party sellers through a process 
    known as ``data pass''. These third party sellers in turn used 
    aggressive, misleading sales tactics to charge millions of American 
    consumers for membership clubs the consumers did not want.
        (5) Third party sellers offered membership clubs to consumers 
    as they were in the process of completing their initial 
    transactions on hundreds of websites. These third party ``post-
    transaction'' offers were designed to make consumers think the 
    offers were part of the initial purchase, rather than a new 
    transaction with a new seller.
        (6) Third party sellers charged millions of consumers for 
    membership clubs without ever obtaining consumers' billing 
    information, including their credit or debit card information, 
    directly from the consumers. Because third party sellers acquired 
    consumers' billing information from the initial merchant through 
    ``data pass'', millions of consumers were unaware they had been 
    enrolled in membership clubs.
        (7) The use of a ``data pass'' process defied consumers' 
    expectations that they could only be charged for a good or a 
    service if they submitted their billing information, including 
    their complete credit or debit card numbers.
        (8) Third party sellers used a free trial period to enroll 
    members, after which they periodically charged consumers until 
    consumers affirmatively canceled the memberships. This use of 
    ``free-to-pay conversion'' and ``negative option'' sales took 
    advantage of consumers' expectations that they would have an 
    opportunity to accept or reject the membership club offer at the 
    end of the trial period.

SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DECEPTIVE INTERNET 
              SALES PRACTICES.

    (a) Requirements for Certain Internet-Based Sales.--It shall be 
unlawful for any post-transaction third party seller to charge or 
attempt to charge any consumer's credit card, debit card, bank account, 
or other financial account for any good or service sold in a 
transaction effected on the Internet, unless--
        (1) before obtaining the consumer's billing information, the 
    post-transaction third party seller has clearly and conspicuously 
    disclosed to the consumer all material terms of the transaction, 
    including--
            (A) a description of the goods or services being offered;
            (B) the fact that the post-transaction third party seller 
        is not affiliated with the initial merchant, which may include 
        disclosure of the name of the post-transaction third party in a 
        manner that clearly differentiates the post-transaction third 
        party seller from the initial merchant; and
            (C) the cost of such goods or services; and
        (2) the post-transaction third party seller has received the 
    express informed consent for the charge from the consumer whose 
    credit card, debit card, bank account, or other financial account 
    will be charged by--
            (A) obtaining from the consumer--
                (i) the full account number of the account to be 
            charged; and
                (ii) the consumer's name and address and a means to 
            contact the consumer; and
            (B) requiring the consumer to perform an additional 
        affirmative action, such as clicking on a confirmation button 
        or checking a box that indicates the consumer's consent to be 
        charged the amount disclosed.
    (b) Prohibition on Data-Pass Used To Facilitate Certain Deceptive 
Internet Sales Transactions.--It shall be unlawful for an initial 
merchant to disclose a credit card, debit card, bank account, or other 
financial account number, or to disclose other billing information that 
is used to charge a customer of the initial merchant, to any post-
transaction third party seller for use in an Internet-based sale of any 
goods or services from that post-transaction third party seller.
    (c) Application with Other Law.--Nothing in this Act shall be 
construed to supersede, modify, or otherwise affect the requirements of 
the Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.) or any 
regulation promulgated thereunder.
    (d) Definitions.--In this section:
        (1) Initial merchant.--The term ``initial merchant'' means a 
    person that has obtained a consumer's billing information directly 
    from the consumer through an Internet transaction initiated by the 
    consumer.
        (2) Post-transaction third party seller.--The term ``post-
    transaction third party seller'' means a person that--
            (A) sells, or offers for sale, any good or service on the 
        Internet;
            (B) solicits the purchase of such goods or services on the 
        Internet through an initial merchant after the consumer has 
        initiated a transaction with the initial merchant; and
            (C) is not--
                (i) the initial merchant;
                (ii) a subsidiary or corporate affiliate of the initial 
            merchant; or
                (iii) a successor of an entity described in clause (i) 
            or (ii).

SEC. 4. NEGATIVE OPTION MARKETING ON THE INTERNET.

    It shall be unlawful for any person to charge or attempt to charge 
any consumer for any goods or services sold in a transaction effected 
on the Internet through a negative option feature (as defined in the 
Federal Trade Commission's Telemarketing Sales Rule in part 310 of 
title 16, Code of Federal Regulations), unless the person--
        (1) provides text that clearly and conspicuously discloses all 
    material terms of the transaction before obtaining the consumer's 
    billing information;
        (2) obtains a consumer's express informed consent before 
    charging the consumer's credit card, debit card, bank account, or 
    other financial account for products or services through such 
    transaction; and
        (3) provides simple mechanisms for a consumer to stop recurring 
    charges from being placed on the consumer's credit card, debit 
    card, bank account, or other financial account.

SEC. 5. ENFORCEMENT BY FEDERAL TRADE COMMISSION.

    (a) In General.--Violation of this Act or any regulation prescribed 
under this Act shall be treated as a violation of a rule under section 
18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair 
or deceptive acts or practices. The Federal Trade Commission shall 
enforce this Act in the same manner, by the same means, and with the 
same jurisdiction, powers, and duties as though all applicable terms 
and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et 
seq.) were incorporated into and made a part of this Act.
    (b) Penalties.--Any person who violates this Act or any regulation 
prescribed under this Act shall be subject to the penalties and 
entitled to the privileges and immunities provided in the Federal Trade 
Commission Act as though all applicable terms and provisions of the 
Federal Trade Commission Act were incorporated in and made part of this 
Act.
    (c) Authority Preserved.--Nothing in this section shall be 
construed to limit the authority of the Commission under any other 
provision of law.

SEC. 6. ENFORCEMENT BY STATE ATTORNEYS GENERAL.

    (a) Right of Action.--Except as provided in subsection (e), the 
attorney general of a State, or other authorized State officer, 
alleging a violation of this Act or any regulation issued under this 
Act that affects or may affect such State or its residents may bring an 
action on behalf of the residents of the State in any United States 
district court for the district in which the defendant is found, 
resides, or transacts business, or wherever venue is proper under 
section 1391 of title 28, United States Code, to obtain appropriate 
injunctive relief.
    (b) Notice to Commission Required.--A State shall provide prior 
written notice to the Federal Trade Commission of any civil action 
under subsection (a) together with a copy of its complaint, except that 
if it is not feasible for the State to provide such prior notice, the 
State shall provide such notice immediately upon instituting such 
action.
    (c) Intervention by the commission.--The Commission may intervene 
in such civil action and upon intervening--
        (1) be heard on all matters arising in such civil action; and
        (2) file petitions for appeal of a decision in such civil 
    action.
    (d) Construction.--Nothing in this section shall be construed--
        (1) to prevent the attorney general of a State, or other 
    authorized State officer, from exercising the powers conferred on 
    the attorney general, or other authorized State officer, by the 
    laws of such State; or
        (2) to prohibit the attorney general of a State, or other 
    authorized State officer, from proceeding in State or Federal court 
    on the basis of an alleged violation of any civil or criminal 
    statute of that State.
    (e) Limitation.--No separate suit shall be brought under this 
section if, at the time the suit is brought, the same alleged violation 
is the subject of a pending action by the Federal Trade Commission or 
the United States under this Act.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
Restore Online Shoppers' Confidence Act - Defines "post-transaction third party seller" as a person that: (1) sells, or offers for sale, any good or service on the Internet; (2) solicits purchases on the Internet through an initial merchant after the consumer has initiated a transaction with the initial merchant; and (3) is not the initial merchant, a subsidiary or corporate affiliate of the initial merchant, or a successor to the initial merchant or subsidiary.

Makes it unlawful for any post-transaction third party seller to charge or attempt to charge any consumer's credit card, debit card, bank account, or other such financial account in an Internet-based transaction, unless: (1) before obtaining the consumer's billing information, the seller has disclosed all material terms, including the fact that the such seller is not affiliated with the initial merchant, and a description and the cost of the offered goods or services; and (2) the seller has received the express informed consent from the consumer for the charge.

Makes it unlawful for an initial merchant to disclose such financial account number or other billing information to any post-transaction third party Internet seller (sometimes referred to as a data-pass).

Makes it unlawful for any person to charge or attempt to charge a consumer for goods or services sold in an Internet-based transaction through a negative option feature unless the person: (1) provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer's billing information; (2) obtains a consumer's express informed consent before charging the consumer's financial account for products or services through such transaction; and (3) provides simple mechanisms for a consumer to stop recurring charges from being placed on the consumer's financial account. Defines "negative option feature" to mean, in an offer or agreement to sell or provide any goods or services, a provision under which the customer's silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.

Treats a violation of this Act or any regulation thereunder as an unfair or deceptive act or practice. Requires the Federal Trade Commission (FTC) to enforce this Act.

Authorizes the attorney general of a state to bring an action for injunctive relief in federal court on behalf of the state's residents.
A bill to protect consumers from certain aggressive sales tactics on the Internet.