The Federal Trade Commission has decided not to change the Negative Option Rule, the agency has announced, keeping the Rule in its current form.
As part of its systemic review of all guides and rules, the FTC sought comments on the “Trade Regulation Rule Concerning Use of Prenotification Negative Option Plans” in 2009.
The Rule applies to one method of negative option plans: when sellers periodically notify consumers of an upcoming merchandise shipment with a set period of time in which to decline. If the consumer takes no action, then the seller may presume acceptance of the offer.
Although the agency acknowledged the receipt of comments with “some evidence of concerns” with negative option marketing beyond the prenotification offers currently covered by the Rule, the FTC determined that it would maintain the Rule as is for now for two reasons.
First, the enactment of the Restore Online Shoppers’ Confidence Act established requirements for Internet transactions for other types of negative option plans – trial conversions, continuity plans, and automatic renewals – such as disclosures and express consent prior to charging accounts.
Second, the FTC said that proposed amendments to the Telemarketing Sales Rule will “likely address many” of the concerns expressed in the comments. The agency is considering whether to ban the use of certain payment methods such as unsigned checks and remotely created “payment orders,” which the FTC said are commonly used by “con artists and scammers.”
To read the Rule, click here.
Why it matters: While the Rule itself will not be changed, retailers might want to consider a review of their policies and procedures to ensure compliance given the changes under the Restore Online Shoppers’ Confidence Act and the proposed tweaks to the Telemarketing Sales Rule.