The FTC’s 230-page final Rule applies to any person who sells, offers, charges, or otherwise markets a good or service with a “negative option feature,” which includes automatic renewals, continuity plans, and free-to-pay conversions, among others.
(1) Prohibition on Misrepresentations: The final Rule prohibits sellers from misrepresenting any Material fact while marketing using negative option features—even if that fact is wholly unrelated to the negative option feature.
(2) Mandatory Disclosures: The Rule requires negative option sellers to clearly and conspicuously disclose all “Material terms,” regardless of whether those terms directly relate to the negative option feature. The Rule includes a non-exhaustive list of terms that must be disclosed, including: (a) the fact that consumers will be charged for the good or service, that the charges will increase, if that is the case, or that the charges occur on a recurring basis; (b) the deadline by which consumers must act to stop recurring charges; (c) the amount the consumer will be charged and the frequency of those charges; and (d) the information necessary for the consumer to find the cancellation mechanism. The Rule requires that these disclosures be clear and conspicuous, that they occur prior to obtaining consumers’ billing information, and that they appear immediately next to and before the means of recording consumers’ consent to the negative option .
(3) Express Affirmative Consent: The Rule requires sellers to obtain consumers’ “unambiguously affirmative consent” to the negative option feature. The consent (a) must be separate from any other portion of the transaction; (b) cannot include any information that interferes with or undermines the ability of the consumer to consent; and (c) must occur before the consumer is charged.
(4) Simple Cancellation (“Click to Cancel”): Sellers are required to provide a “simple mechanism” for a consumer to cancel the negative option feature or avoid being charged. The Rule requires that this “simple mechanism” be at least as easy to use as the mechanism the consumer used to consent to the negative option feature.
