Published: July 2023

FTC’s proposed Negative Option Rule would protect consumers from unwanted automatic subscription renewals

A half-dozen advocacy organizations, including Consumer Action, wrote a letter to the Federal Trade Commission supporting the agency’s proposal to strengthen its Negative Option Rule—an effort to protect consumers from unwanted automatic charges when a subscription trial period ends.

Consumer Action joined allies in a letter to the Federal Trade Commission (FTC) expressing strong support for the agency’s proposed changes to its Negative Option Rule for subscriptions. Free trial conversions and recurring subscription services cost consumers hundreds of millions of dollars each year. These unexpected charges are especially harmful to low-income consumers. Among the new requirements under the proposed FTC rule would be clear and conspicuous disclosures of automatic renewal terms, affirmative consent, and easy cancellation procedures. Specifically, businesses would have to send annual reminders for subscriptions involving “anything other than physical goods.” Such reminders would need to “identify the product or service, the frequency and amount of charges, and the means to cancel” and be delivered in the same manner through which consent was provided. They would also have to offer simple and easy cancellation methods, which the FTC calls “click to cancel” (e.g., a consumer who purchases a subscription online must be allowed to cancel online). The groups urged the FTC to go further by also requiring sellers to obtain consumers’ consent to recurring charges within six days before a free trial converts into a paid subscription and to provide notice to their subscribers prior to each recurring charge.

Lead Organization

National Consumers League

More Information

Click here to read the letter.

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