A “negative option” is an agreement in which goods or services are automatically sent to you, unless you tell the seller you don`t want them. While negative options can be helpful if you want the goods sent to you, they can also be annoying. For example, if you forget to inform a seller that you do not want a particular good, you are forced to pay for the unwanted goods or return the goods to the seller, which can be inconvenient. Therefore, it is important to understand what type of agreement you are entering into before making commitments. (15) Are there potentially unfair or misleading practices on the market in the marketing of negative option plans which are not covered by the rule? If so, what types of negative option plans does this marketing include? What evidence, such as empirical data, consumer perception studies or consumer complaints, shows whether such practices are widespread? Please provide this evidence. If you intend to engage in negative option marketing practices, you must comply with the FTC`s negative option rule and state laws governing such practices. The term “opt-out” is broadly defined by the FTC and refers to a category of transactions in which a customer`s failure to take positive action, whether to reject an offer or cancel a contract, is considered by the seller to be consented to be charged for certain goods or services. If you engage in these practices, FTC laws require that ads for subscriptions clearly disclose important information about the terms of the offer. (Failure to disclose material information is still considered a deceptive practice under FTC and/or state consumer protection laws.) Chances are you`ve been offered “10 CDs for $1” or a free trial subscription to one of your favorite magazines. However, by accepting such offers, you can enter into a negative option plan. You can use email to communicate with consumers.
However, if consumers do not understand that communications are sent by email, they may not respond and incur charges they do not want. Therefore, you should clearly inform your customers of how notifications are sent before subscribing to a negative option plan. The topic list contains a list of index terms (topic list) for each CFR exhibit number cited in the document title. The terms form a common vocabulary for indexing all organizations` regulatory documents and form the basis of the “CFR” created by the CAO. The Telemarketing Sales Rule (“TSR”) (16 CFR part 310) prohibits deceptive telemarketing acts or practices, including those involving negative option offers and certain types of payment methods common in deceptive marketing. TSR only applies to negative option offers made over the phone. Specifically, the FSR requires telemarketers to disclose all important terms and conditions of the opt-out function, including the need for positive consumer action to avoid fees, the date (or dates) on which fees are submitted for payment, and the specific steps the customer must take to avoid fees. It also prohibits telemarketers from distorting this information and includes specific requirements for payment authorisation. [19] The Commission recently amended the OAS to prohibit the use of payment methods commonly used for deceptive marketing, including negative options such as remotely created cheques. [20] The FTC`s policy statement is timely. By 2022, at least four states — California, Colorado, Delaware and Illinois — have enacted or will pass new laws or amendments to existing negative option marketing laws.
California. The law, which will come into effect on July 1, updates existing termination and termination requirements and requires a reminder notice to be sent three to 31 days before a free trial of more than 31 days expires. Colorado. The law, which went into effect on Jan. 1, requires sellers to cancel 25 to 40 days before any extension of 12 months or more. For a renewal period of less than 12 months, sellers must cancel 25 to 40 days prior to any renewal that extends the contract beyond the first 12 months and an additional 12 months. Delaware. The state`s first automatic renewal law went into effect on September 1. Sellers are subject to requirements similar to those of the new California law.
In addition, sellers must cancel 30 to 60 days in advance before renewing beyond 12 months. Illinois. Also on Jan. 1, amendments to Illinois` existing auto-renewal law will go into effect to require inexpensive and easy-to-use cancellation mechanisms. The Commission first enacted the rule in 1973 under the FTC Act, 15 U.S.C. 41 et seq., after finding that certain default marketers had engaged in unfair and deceptive marketing practices that violated Section 5 of the Act, 15 U.S.C.