AG Henry Supports FTC’s Amendments to Negative Option Rule, which will Protect Consumers from Deceptive Auto-Renewal Programs and Plans

June 26, 2023 | Topic: Consumers

HARRISBURG – Pennsylvania Attorney General Michelle Henry announced that, along with the New York Office of Attorney General, she is leading a coalition of 26 state Attorneys General in supporting the Federal Trade Commission’s amendments to its Negative Option Rule.

Negative options are marketing methods for companies to enroll consumers in subscriptions, continuity plans and programs, automatic renewals, and other reoccurring charges. These plans and programs do not require consent for each attached reoccurring charge. Rather, in some cases, a consumer’s silence is deemed sufficient consent.

Amendments to the existing Negative Option Rule would provide more protection to consumers, clarifying terms at enrollment and offering easy and immediate cancellation options and reminders of upcoming charges.

Pennsylvania OAG has taken action against negative option sellers, recently reaching a $2.35 million settlement with AdoreMe regarding the intimate apparel vendor’s monthly “VIP Program” charges.

“Consumers’ silence should not be interpreted as consent, unless they are fully aware of the program and subscription terms upon agreement,” Attorney General Henry said. “Negative option tactics are deceptive and can be exploited to enroll consumers into subscriptions they cannot easily cancel.”

The comment letter was filed on June 23 in response to an FTC notice of proposed rulemaking.  In the notice, the FTC sought comment on the following proposed amendments:

  • Applying the Rule to all forms of negative option marketing;
  • Prohibiting misrepresentations of any material fact regarding the entire agreement;
  • Requiring clear and conspicuous disclosures of certain information before obtaining consumer’s billing information;
  • Requiring sellers to obtain express informed consent before charging consumers;
  • Requiring sellers to provide a simple mechanism for consumers to cancel a negative option subscription; and
  • Requiring sellers to provide reminders concerning the frequency and amount of charges, and the means to cancel.

In their letter, the Attorneys General, led by AG Henry and New York Attorney General Letitia James, support the FTC’s proposed amendments and offer suggestions to further enhance consumer protection.

Joining in the letter are Attorneys General from Alabama, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Vermont, Washington, and Wisconsin.

A copy of the letter can be found HERE.

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