FTC to re-release its proposed 'negative option' rule, affecting auto-renew subscriptions

Lisa McGraw

Aug 20, 2024

The Federal Trade Commission is getting ready to re-release its restrictive proposed “negative option” rule, which if passed, will have a significantly negative impact on the ability to sell auto-renew subscriptions.

The rule would require affirmative consent for auto-renewal separate from any other part of the order among other changes.

The proposed changes from the Federal Trade Commission website are below. It should be noted that violations of the proposed rule would allow the FTC to seek consumer redress and civil monetary penalties of more than $50,000 per violation.

• A simple cancellation mechanism: If consumers are unable to easily leave any program when they want to, the negative option feature becomes nothing more than a way to continue charging them for products they no longer want. To address this issue, the proposed rule would require businesses to make it at least as easy to cancel a subscription as it was to start it. For example, if you can sign up online, you must be able to cancel on the same website, in the same number of steps.
• New requirements before making additional offers: The proposed rule would allow sellers to pitch additional offers or modifications when a consumer tries to cancel their enrollment. But before making such pitches, sellers must first ask consumers whether they want to hear the pitches. In other words, a seller must take “no” for an answer and upon hearing “no” must immediately implement the cancellation process.
• New requirements regarding reminders and confirmations: The proposed rule would require sellers to provide an annual reminder to consumers enrolled in negative option programs involving anything other than physical goods before they are automatically renewed.

This could be a costly set of requirements for National Newspaper Association members. Newspapers will need new technology, have to retrain employees and do a major overhaul of their subscription and cancellation systems.

NNA staff will continue to monitor the progress and let you know what action we may be able to take to mitigate the damage these rules could cause.