New FTC Rule Makes Cancelling Negative Option Plans Easier

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  • The FTC has finalized a new “Click-to-Cancel” rule to protect consumers from unfair or deceptive practices when seeking to cancel their enrollment in subscription services, memberships, and other recurring-payment programs.
  • The rule—which amends the FTC’s Negative Option Rule—applies to all negative option programs in any media, and requires a simple mechanism to be provided to cancel a negative option feature and immediately halt charges. It also prohibits misrepresentations of any material fact while marketing goods or services using negative option features; requires sellers to clearly and conspicuously disclose material terms prior to obtaining consumers’ billing information in connection with a negative option feature; and requires express informed consent from a consumer prior to any charges.
  • A bipartisan coalition of 26 AGs previously filed a comment letter in support of the FTC’s proposed amendments to the Negative Option Rule.
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