The Federal Trade Commission (FTC) is currently seeking public comment on an Advance Notice of Proposed Rulemaking (ANPRM) regarding the current Negative Option Rule and proposed amendments to the rule in order to better address deceptive or unfair negative option practices. According to the FTC press release:
“The Federal Trade Commission announced today that it is seeking public comment on an Advance Notice of Proposed Rulemaking (ANPRM) concerning the agency’s Rule Concerning the Use of Prenotification Negative Option Plans, commonly known as the Negative Option Rule. The ANPRM asks the public: to weigh in on the current Rule; whether proposed amendments are needed; and about potential regulatory alternatives to address deceptive or unfair negative option practices.
Negative options are a common form of marketing in which the absence of affirmative consumer action constitutes consent to be charged for goods or services. Negative options are widely offered and can provide benefits to both sellers and consumers. However, such practices can harm consumers when companies make misleading or inadequate disclosures, bill consumers without their consent, or make cancellation difficult or impossible. The Commission continues to receive thousands of complaints each year — including more than 100,000 complaints in the past five years—about negative options and related practices.
“Negative option subscriptions can offer procompetitive features to consumers and the marketplace more broadly by lowering transaction costs and ensuring consumers receive uninterrupted service,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “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 announced today, seeks public comment to determine whether and how the Commission should use its authority to address negative option marketing, including whether the agency should amend the current rule to address deceptive or unfair acts or practices.”
To continue reading the FTC’s full press release, click here.
