The Center for Data Innovation has filed comments with the Federal Trade Commission (FTC) on proposed amendments to the Negative Option Rule. As explained in the NPRM, the FTC aims to amend the Negative Option Rule to combat unfair or deceptive practices that include recurring charges for products or services consumers do not want and cannot easily cancel and to establish a simple mechanism for cancellation of negative option services. Our comments offers four recommendations:
- The Commission should expand the Negative Option Rule to include automatic renewals, continuity plans, and free trials in addition to prenotification plans.
- The Commission should create a working group of industry experts and consumer protection advocates to define a “simple cancellation mechanism” before enacting the rule, and publish best practices and guides to help businesses adhere to the rule.
- The Commission should alter the definition of “save” in the proposed rule to refer directly to additional offers or benefits that may be added to or altered in a plan to persuade a consumer from canceling. The Commission should also include an exception for information about permanent, relevant, or irreparable harms resulting from the cancellation.
- The Commission should remove the phrase “any material fact related to the underlying
good or service” and change the language to “any material fact related to the underlying negative option feature” to limit the liability for misrepresentations to just misrepresentations about the negative option marketing practice and negative option feature, as outlined in Commissioner Wilson’s dissent.