The economic downturn has transformed the Internet to a place of financial risk: from “businesspeople” promising methods to make money to people preying on those who can least afford it with unfavorable debt consolidation offers. This week the FTC announced a number of movements to attack the rebilling industry with force.

Negative option rebilling, the simple concept of which is a “free trial” which places you on a subscription list if you do not cancel, has been considered a quasi-legitimate business practice in some industries for decades. Companies in areas such as mail order book clubs or the new mail order DVDs are good examples.

A California company called “Family Products” marketed alleged “get rich quick scams,” such as the “John Beck Free and Clear Real Estate System” was targeted by the FTC for making “bogus claims through DVDs and infomercials” about the effectiveness of their product. Family Products allegedly duped over 600,000 Americans out of $300 million.

The traditional concept of negative option rebilling has effectively been outlawed in Canada, but remains a viable business plan in much of the rest of the world.

Operation Short Change, as the movement is called, was announced between the FTC and the Justice Department yesterday and includes dozens of cases brought forward in at least 13 states.

A quick Google search demonstrates to reporters that “weight loss” is another niche heavily effected by negative option rebilling. With products like “Nature’s Colon Cleanse” (do not order from this site — at least, not without reading the terms) which appears to sell little more than the concept of doing a “cleanse” offering “limited” free trials to customers in exchange for adding them to their rebill list. Some of these companies provide proper customer support to allow users to cancel, but the majority do not.

Attorney General of North Carolina, Roy Cooper, told the Associated Press that he has received a huge upswing of complaints regarding these scams. “In the down economy, the scam artists crawl out from under rocks. If they want money up-front, then they’re up to no good.”

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