Today the Federal Trade Commission announced it is seeking public comment on ways to improve its existing regulations for negative option marketing.
Negative-option marketing is the legal term for subscription sales, whereby the absence of affirmative consumer action constitutes consent to be regularly and automatically charged for goods or services.
The FTC’s position, bolstered by so many enforcement actions, is that the obvious consumer benefits of such sales may be lost when marketers fail to make adequate disclosures, bill consumers without their consent, or make cancellation difficult or impossible. Such practices generate thousands of consumer complaints to the FTC each year.
Over the years, the FTC has sought to address these problems through individual law enforcement cases and various regulatory requirements, including the FTC’s current Negative Option Rule. But that rule from many decades ago only addresses prenotification plans (e.g., book-of-the-month clubs) and does not reach other common forms of modern negative option marketing (e.g., automatic renewals).
The FTC feels that the other federal law addressing online negative option sales, namely the Restore Online Shoppers’ Confidence Act, and other regulations (e.g., the Telemarketing Sales Rule) may not be sufficient to provide a consistent legal framework across all media or types of plans, nor the specificity necessary to deter deceptive practices.
I will keep you posted.
