The Commission’s updated rule will apply to almost all negative option programs in any media.  The rule also will prohibit sellers from misrepresenting any material facts while using negative option marketing; require sellers to provide important information before obtaining consumers’ billing information and charging them; and require sellers to get consumers’ informed consent to the negative option features before charging them.  The final rule announced today is part of the FTC’s ongoing review of its 1973 Negative Option Rule, which the agency is modernizing to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs in an increasingly digital economy where it’s easier than ever for businesses to sign up consumers for their products and services.  Commission approval and publication follows the March 2023 announcement of a notice of proposed rulemaking which resulted in more than 16,000 comments from consumers and federal and state government agencies, consumer groups, and trade associations.  While negative option marketing programs can be convenient for sellers and consumers, the FTC receives thousands of complaints about negative option and recurring subscription practices each year.  The number of complaints has been steadily increasing over the past five years and in 2024 the Commission received nearly 70 consumer complaints per day on average, up from 42 per day in 2021.  The final rule will provide a consistent legal framework by prohibiting sellers from:

• misrepresenting any material fact made while marketing goods or services with a negative option feature;
• failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature;
• failing to obtain a consumer’s express informed consent to the negative option feature before charging the consumer; and
• failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.

Following an evaluation of public comments, the Commission has voted to adopt a final rule with certain changes, most notably dropping a requirement that sellers provide annual reminders to consumers of the negative option feature of their subscription, and dropping a prohibition on sellers telling consumers seeking to cancel their subscription about plan modifications or reasons to keep to their existing agreement without first asking if they want to hear about them.  The Commission vote approving publication of the final rule in the Federal Register was 3-2, with Commissioners Melissa Holyoak and Andrew N. Ferguson voting no.  Commissioner Rebecca Kelly Slaughter issued a separate statement and Commissioner Holyoak issued a separate dissenting statement.  FTC staff has developed a fact sheet summarizing the changes to the rule.  The primary staffer on this matter is Katherine Johnson in the FTC’s Bureau of Consumer Protection.  The Federal Trade Commission works to promote competition and protect and educate consumers.  The FTC will never demand money, make threats, tell you to transfer money, or promise you a prize.  Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at: ReportFraud.ftc.gov.