š Negative option billing models – while there are various types, these models typically have a term or condition under which the business may interpret the consumerās inaction to cancel an agreement or refuse a good or service as acceptance of their offer, including the continuation of the offer
– Some common types: automatic renewal, continuity plans, free-to-pay conversionsĀ
š„š In response to an increase in complaints about unauthorized charges and difficult cancellation processes, the FTC recently issued a new enforcement policy statement warning companies that theyāll face legal action if they donāt meet these 3 requirements
š Summary of the 3 Key Requirements
1ļøā£ Provide clear and upfront disclosures of all material terms of the product/service
āļø Information about the product/service needed to prevent deception about the characteristics of product/service
āļø Price increase following the end of the trial period and, if applicable, recurring charges unless consumer takes timely actions
āļø Price to be billed and frequency of billing
āļø Deadlines by which the consumer must act to stop charges
āļø Date(s) each charge is submitted for payment
āļø How to cancel
āļø Disclosures must be easily noticeable, easy to understand, and not contain any additional information that undermines the consumerās ability to understand the disclosuresĀ
2ļøā£ Receive consumerās affirmative consent
āļø Obtain consumerās acceptance of the negative option feature separately from any other portion of the entire transaction
āļø Not contain any additional information that undermines the consumerās ability to provide expressed informed consent
3ļøā£ Offer a simple and easy cancellation method
āļø Provide cancellation method through the same medium and at least as easy as the method used to buy the product/service
āļø Do not subject consumers to new offers or impose unreasonable delays to the consumerās cancellation efforts
šÆ Contact me if you need help making sure your businessās marketing is under compliance with the law!
