Continuing its focus on fraudulent subscription plan services, the Federal Trade Commission (“FTC”) recently halted a subscription plan operation comprised of 15 corporations and eight individuals. After filing a complaint in a California federal court, the FTC obtained temporary injunctive relief enjoining the defendants from, among other things, marketing allegedly deceptive subscription plans. Below, we discuss the claims contained in the complaint, and the landmines that companies must avoid when offering internet-based subscription plans to consumers.
Allegations of Fraudulent Internet-Based Subscription Plans
In its Complaint, the FTC alleges that Genesis Tech and its founders/CEOs operated a vast portfolio of misleading internet-based subscription plans. Ranging from online programs purporting to diagnose and treat ADHD symptoms to PDF editing tools, the Complaint alleges that Defendants deceived consumers with supposedly free trials or low-cost offers while hiding the true cost and recurring nature of charges. According to the Complaint, Defendants also created unreasonable and difficult obstacles for consumers to cancel these subscription plans. From early 2023 to mid-2025, the Complaint alleged that five products accounted for nearly a quarter billion dollars in global revenue. The FTC further alleged that Defendants continually “register new corporate identities and open new merchant accounts . . . [and] channel their ill-gotten gains through cross-border transfers among corporate affiliates, thereby concealing Defendants’ true identities from consumers and hiding assets.” As a result of this conduct, the Complaint asserts that Defendants violated the FTC Act and the Restore Online Shoppers’ Confidence Act (“ROSCA”) by: (1) failing to clearly and conspicuously disclose material terms; (2) unfairly charging consumers without authorization; (3) failing to obtain express informed consent for subscription fees and charges; and (4) failing to provide consumers with simple mechanisms for cancellation.
The FTC Will Continue to Address Misleading Subscription Offerings
In its press release, the FTC stated that “[t]he Trump-Vance FTC is engaged in robust enforcement to address deception and illegal subscription offerings . . . [t]his case illustrates the benefits and importance of the Bureau’s reinvigorated anti-fraud program.” Companies should take heed and ensure, among other things, that they: (1) clearly and conspicuously disclose the terms associated with subscription plans, including the disclosure of any auto-renewal or recurring charges; (2) obtain prior express written consent from consumers for any fees and recurring charges associated with the subscription plans; (3) provide consumers with a simple mechanism to cancel subscription plans; and (4) upon cancellation, immediately stop recurring charges.
The foregoing is not meant to serve as an exhaustive list of the steps companies should take when offering subscription plans. As such, businesses would be wise to obtain guidance from experienced marketing law attorneys before offering products or services on a subscription basis. Consulting the attorneys at Klein Moynihan Turco (“KMT”) can mitigate the risks that companies face and ease the burden of keeping up with constantly evolving regulatory requirements. KMT’s attorneys have significant experience counseling clients on federal and state marketing regulation compliance and providing defense in proceedings involving allegations of marketing law violations.
If you or your business needs assistance with a federal or state marketing law matter, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice nor is it a substitute for seeking legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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