The FTC has announced that it will hold a workshop on January 25, 2007 focusing on "negative option offers" over the Internet. According to the FTC notice announcing the workshop, negative option offers are the offer by a business of a product or an initial provision of services, coupled with the continuing option to receive the product or services in the future if the customer does not cancel such further receipt. The key factor that makes an offer a "negative option," according to the FTC notice, is the fact that the customer's silence or failure to take an affirmative action to reject goods or services or cancel the agreement is treated as acceptance of the offer.
The workshop will analyze three types of negative option offers:
• Prenotification Negative Option Plans—Plans where businesses send notices to customers regarding products or services that the customer will receive unless the customer tells the business within a set amount of time that they do not want to receive the product or service.
• Continuity Plans—Plans where customers regularly receive products or services until they cancel the agreement.
• Trial Conversions—Plans where customers agree ahead of time to receive products or services for a trial period and, unless the customer cancels after the trial period, the delivery of the product or service will continue. These are often "free to pay" conversions where the customer is not charged for the trial offer and begins to be charged after the trial period.
The FTC has indicated that it will explore the following questions at the workshop:
1. What are the pros and cons of negative option marketing?
2. How do consumers behave when viewing and responding to marketing offers online?
3. How can marketers meet the clear and conspicuous standard for advertising disclosures when making negative option offers online?
4. How can advertisers make negative option offers with effective disclosures that are compatible with the advertising message?
One area that is expected to receive significant discussion is the interplay between contract law and the FTC's clear and conspicuous standards. The workshop is open to the public and will be held in Washington, DC. The FTC will also accept written comments until February 26, 2007.