Rockefeller Bill Caps off
Tough 2010 for Marketers
2010 represented the toughest legislative climate the DR industry has faced in years — and 2011 will likely only be tougher. The economic down- turn squeezed the bottom line and regulators
took aim at a broad swath of marketing practices. At the
same time, many states were busy enacting some even
more stringent consumer protection laws.
Nothing during 2010 haunted the direct response
community quite like a bill introduced by Sen. Jay Rockefeller, D-W.Va., the chairman of the Senate Committee
on Commerce, Science & Transportation. Following a
yearlong investigation of membership clubs and online
direct response marketers, Rockefeller introduced the
Restore Online Shoppers’ Confidence Act in May 2010.
The “Rockefeller Bill” sought to effectively end third-party post-transaction marketing that involved “data pass,”
the practice of one merchant sharing consumers’ payment
information with another marketer in order to complete
The original version of the Rockefeller Bill also included language that would have severely curtailed negative option marketing. Through the efforts of many in
the direct response industry, the most onerous negative-option language was stripped from the version of the bill
that was reported out of the committee this summer.
After the bill left committee, the fight was not over.
A July 30 Senate staff working draft of a proposed amendment to the bill entertained the idea of giving the Federal
Trade Commission (FTC) broad expedited rulemaking
authority to promulgate rules governing all online negative option marketing. Again, the industry succeeded in
keeping this language from being added to the bill.
During August, the industry was able to prevent sev-
eral attempts to “hotline” the bill. Hotlined bills can pass
the Senate virtually instantly by unanimous consent, typ-
ically without any amendment,
debate or other consideration.
However, the Rockefeller Bill
finally passed the Senate, via the
hotline procedure, on Nov. 30.
Congressman Zack Space,
D-Ohio, introduced a near-identical version of the Rock-
By Jeffrey D. Knowles
and Ellen T. Berge
efeller Bill, (H.R. 5707), in the House of Representatives
in July. After much speculation that the bill would die
in the House, the Senate version of the bill passed the
House by a voice vote on Dec. 15.
The bill as passed prohibits, in most cases, any third-party seller from charging or attempting to charge a
consumer, after an initial transaction, for any good or
service sold over the Internet. It also prohibits the use of
“data pass” and requires post-transaction sellers to clearly
disclose their product and terms of any agreement to the
consumer. It also requires that consumers re-enter all personal and financial information for any post-transaction
The bill also prohibits third-party sellers from using
most “negative option” or “opt-out” tactics. Marketers
using a negative option model for a post-transaction
third-party must provide a form disclosing all terms of the
agreement, obtaining express consent from consumers,
and providing a simple way for consumers to cancel.
Marketers should learn a number of lessons from this
battle that will inform the regulatory debate in 2011 and
beyond. The first is that the FTC’s regulatory appetite has
been whetted and it will seek to have its regulatory powers expanded. Second, consumer protection sells. In the
current economic climate, regulators and lawmakers feel
a need to protect “vulnerable” consumers. This pervasive
mood leads to more aggressive enforcement and makes
it more difficult for the direct response industry to tell its
side of the story.
Finally, legislation is not always necessary to drive
change in the marketplace. Congressional attention persuaded Visa and MasterCard to enforce policies that essentially enacted the anti-data pass provisions of the bill
long before it passed.
Looking forward, if the industry waits until the battle lines have been drawn on an issue, the battle may
already have been lost. Although Republican control of
the House may create a somewhat more business-friendly
environment, the direct response community is often
an easy political target. Only by proactively engaging
lawmakers and regulators, telling the industry’s story, and
explaining the consumer benefits our industry provides
can we hope to level the playing field. ■