Did ROSCA Kill Cross-Sales?
There was a year-end move by the Obama administration and its democratic-backed congressional allies that profoundly affects many adult entertainment websites, but which has received relatively little notice. It is known as the Restore Online Shoppers’ Confidence Act (ROSCA), and it is now the law of the land.
According to attorney Dan Pepper of the Pepper Law Group, ROSCA targets several commonly used marketing practices, including so-called “negative options,” that have come under fire from state attorneys general and the Federal Trade Commission.
“In the past, the FTC has targeted allegedly deceptive negative option features pursuant to its authority under Section 5 of the FTC Act,” Pepper stated. “ROSCA will make it easier for it to bring cases and, notably, gives it civil penalty authority that it does not have under Section 5: specifically, the law authorizes the FTC to obtain penalties of up to $16,000 per violation.”
And those violations can quickly add up.
ROSCA effectively kills traditional cross-sales by prohibiting merchants from sharing a customer’s billing information with other merchants. While cross-sales are still possible under ROSCA, a secondary merchant is required to have a consumer’s informed consent, expressly obtained, before the consumer may be charged. This includes clearly specifying that the offer is provided by an unrelated company, as well as outlining a full description of the product or service and the terms of the offer. In return, the customer must provide their name, address and credit card number, then affirm (by clicking an online checkbox, for example), their willingness to make this purchase.
“Cross-sales are allowed as long at it is the same merchant/company,” Mitch Farber of merchant account specialists NETbilling.com, told XBIZ. “Of course, proper disclosure is required. It then becomes an ‘upsell,’ not a cross-sell.”
“Visa is actually ‘merchant account agnostic,’ so according to the information we have received, even a merchant using an IPSP is not supposed to cross-sell to another company,” Farber added. “Because of this, merchants are working harder to improve and expand their own site networks and build their brand, thus keeping customers internal.”
So for today’s legitimate emarketer, internalized crosssales are the way to go. There are many nuances to the requirements, so for merchants involved in cross-sales, ROSCA compliance should be discussed with both attorneys and billing firms.
For a look at how the changes brought about by ROSCA are playing out in the real world, we turn to one of the industry’s top powerhouse players for insight:
“To the extent that this has affected TopBucks/Pink Visual, it is with respect to the crosssales we do through our own merchant accounts,” Q. Boyer, Director of Public Relations for Pink Visual, told XBIZ. “Where those cross-sales are concerned, we now ‘cross-sell to ourselves,’ so to speak, by displaying offers for one of our more general video sites upon purchase of a nichespecific site, for example.”