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. Specifically, the FTC is seeking the following information to ensure its rulemaking adequately responds to concerns from both consumers and industry:
- Marketplace for Negative Option Programs. The Commission seeks information on the extent to which businesses market products and services using negative options and how these negative option programs operate;
- Negative Option Practices. The Commission seeks information on practices that 1) prevent consumers from understanding the terms of a negative option program, 2) result in consumers being enrolled without their express informed consent, or 3) deter consumers from canceling their enrollments, and whether such practices are prevalent in the marketplace;
- Addressing Unlawful Practices. The Commission seeks information on specific ways to address unfair or deceptive negative option practices, including retaining the current Rule, adopting provisions of the vacated 2024 Rule or some other provisions, or implementing alternatives to regulation (such as educating consumers and businesses on how to avoid unlawful negative option practices), and the costs and benefits of each of these measures; and
- Supporting Studies and Data. The Commission encourages commenters to submit supporting market studies, economic data, or other empirical evidence.
Once the ANPRM has been published in the Federal Register, consumers can submit comments electronically for 30 days. Consumers also may submit comments in writing by following the instructions in the “Supplementary Information” section of the Federal Register notice.
The primary attorney on this matter is Hong Park in the FTC’s Bureau of Consumer Protection.
Source link
