At some point along your company’s path of success and growth, you will need to expand your base of subscribers. That often means entering new geographic markets, but that decision is not without risk.
Delivering localized customer experiences in terms of languages, currencies, prices and payment methods is only one challenge you need to solve. You also need to comply with local rules and offer compliant shopping experiences. If you’re not exactly sure what all that entails, ask yourself:
- Do you offer customers a separate review opportunity after they have filled out their shopping cart page? Guess what? It’s a requirement if you want to sell to EU member countries.
- Do you require a double opt-in (or confirmed opt-in, COI) process for subscribing to your email newsletter? Hint: If you want use email marketing with Canadians, you need to implement it.
- Have you obtained express consent to charge a subscriber once their free trial has expired? Newsflash: You don’t want to be on the wrong side of this issue.
Compliance Risks for Global Subscriptions
“Before the consumer is bound by a … contract … the trader shall provide the consumer with … information in a clear and comprehensible manner …” — Council Directive 2011/83/EU aka The Directive on Consumer Rights (European Commission)
European citizens have expressed discomfort with a lack of transparency when purchasing online. In order to combat these trust issues, online sellers are legally obliged to provide EU customers with a review page or opportunity that provides specific information relevant to the sale. If your typical checkout process is a quick one-page cart where the Buy Now button leads right to a confirmation page, you’ll need to create at least one additional step before a customer submits their payment from the EU.
While shoppers in the U.S. might find this step frustrating or a barrier to purchase, omitting it for shoppers in the EU can lead to invalid purchase agreements, penalties and damage to your reputation.
Double Opt-In Signups for Email
“It is prohibited to send or cause or permit to be sent to an electronic address a commercial electronic message unless the person to whom the message is sent has consented to receiving it.” – Canada’s Anti-Spam Law
On July 1, 2014, most of Canada’s Bill C-28, known as the “Fighting Internet and Wireless Spam Act” (FISA) or “Canada’s Anti-Spam Law” (CASL), came into effect. Consent is the operative word here, and it is used over 60 times in the text of this law. The law requires you to obtain explicit customer consent to send them commercial electronic messages through your marketing email lists. In cases of conflict, you as the merchant will have to provide evidence of customer consent. Therefore, double opt-in is generally considered a best practice.
Violating these rules while sending emails to Canada, Canadians or computers located in Canada may result in considerable fines (up to $10 million per violation for corporations).
Negative Option Billing
“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” — Restore Online Shoppers’ Confidence Act (ROSCA)
In 2016, consumer rights watchdog nonprofit organization Truth in Advertising (TINA.org) alerted the Federal Trade Commission about the selling practices of a lingerie subscription company. These types of complaints from consumer rights organizations highlight the risk for companies who use confusing language about recurring charges. In this case, TINA.org complained to the trade regulators that this subscription company engaged in practices that violated ROSCA due to an unclear sign-up process that left customers on the hook for monthly charges that they didn’t expect.
This doesn’t mean you can’t offer subscriptions to online services. It just means that you have to be considerate of the customer experience. To paraphrase ROSCA:
- Conspicuously disclose that customers are signing up for recurring charges before you obtain their billing information.
- Get customers’ express consent before charging them.
- Make it easy to cancel the subscription.
Providing the best possible experience is critical to acquiring and retaining customers. When you begin expanding beyond your traditional markets, you need to not only localize, but maintain compliance with regional requirements in order to deliver the most successful customer experience.
Timm Neu contributed to this blog post
This blog post does not contain legal advice. The rights, obligations and liabilities of a business vary according to geography, industry, method of delivery, type of product, where your business is, where your customers are and all sorts of other variables that preclude us from using this blog post to tell anyone how they must act from a legal perspective.