The Federal Trade Commission announced on Mar. 11 that it is seeking public comment regarding an Advance Notice of Proposed Rulemaking (ANPRM) related to the agency’s Rule Concerning the Use of Prenotification Negative Option Plans, also known as the Negative Option Rule.
Negative option marketing allows companies to charge consumers for goods or services unless the consumer takes action to decline. While these programs can benefit both sellers and buyers by lowering transaction costs and ensuring uninterrupted service, they have also led to thousands of complaints each year about misleading disclosures, unauthorized billing, and difficult cancellation processes.
Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, said, “Negative option subscriptions can offer procompetitive features to consumers and the marketplace more broadly by lowering transaction costs and ensuring consumers receive uninterrupted service. The Commission’s enforcement track record suggests, however, that negative option subscriptions continue to be plagued by difficult cancellation processes, unlawful retention tactics, and a suite of other impediments that prevent consumers from easily switching or ending subscription services. Neither consumers nor competition are protected when consumers are enrolled in programs that they either do not want or cannot cancel.”
The ANPRM seeks input on several issues: how businesses use negative options in marketing; whether certain practices prevent consumers from understanding terms or make cancellation difficult; possible regulatory alternatives such as education instead of new rules; and supporting data or studies. The FTC encourages submission of market studies or empirical evidence with comments.
Once published in the Federal Register, there will be a 30-day period for electronic comment submissions. Written comments may also be submitted following instructions provided in the notice. Hong Park from the FTC’s Bureau of Consumer Protection is listed as the primary attorney for this matter.
The FTC continues its mission to promote competition and protect consumers through education and enforcement.
