Do you have thoughts on negative option-related regulations? Share them with the FTC

The FTC recently published an Advanced Notice of Proposed Rulemaking (ANPRM) to request input on whether it needs to update the Negative Option Rule from 1973. The comment period is open until April 13, so now is the time to read the notice and submit your comment.

You might already use negative option marketing in your business or subscribe through negative option offerings as a consumer, but if you’re unfamiliar: a negative option is any type of sales term or condition that allows a seller to interpret a customer’s silence, or failure to take an affirmative action, as consent to be charged for goods or services. Negative option offers include pre-notification plans (e.g., product-of-the-month clubs), continuity plans (e.g., bottled water delivery), automatic renewals (e.g., magazine subscriptions), and free-to-pay plans (e.g., a free trial that automatically converts to a paid subscription).

By lowering transaction costs and ensuring consumers receive uninterrupted service, negative options can be beneficial for both businesses and consumers. But they can also cause harm if sellers make misleading or inadequate disclosures, charge consumers without their consent, or make cancellation difficult or impossible.

The FTC has sought to address unfair and deceptive negative option practices through individual law enforcement cases under existing laws and regulations — including the Negative Option Rule (which currently only covers pre-notification plans), Section 5 of the FTC Act, the Restore Online Shoppers’ Confidence Act, and the Telemarketing Sales Rule. Despite the FTC’s law enforcement efforts, consumers continue to submit thousands of negative option-related complaints each year. The FTC’s ANPRM seeks information about negative option marketing to help assess whether further amendments to the Negative Option Rule are necessary.

Does your business use, offer, or engage with negative options? Or do you, as an individual consumer, subscribe through negative options? Then the FTC wants to hear from you. The FTC is looking for information on the current marketplace for negative option programs, enrollment and cancellation practices for negative options, potential ways to address various unfair or deceptive negative option practices, the potential costs and benefits to businesses, consumers, and industries, and any supporting empirical and economic research, studies, and data. You have until April 13 to submit comments online or in writing by following the instructions in the “Supplementary Information” section of the Federal Register notice.