Golden State Today

OAKLAND – As part of a coalition of 26 attorneys general, California Attorney General Rob Bonta today announced that he has filed a comment letter supporting the Federal Trade Commission's (FTC) proposed improvements to its existing Negative Option Rule. “Negative option offers” are a business tactic of interpreting a consumer’s silence — or failure to take affirmative action — as acceptance of an offer, often in the form of a recurring, unwanted subscription that is difficult or impossible to cancel. These deceptive practices have been a source of consumer harm for decades. The FTC’s proposed changes significantly broaden the requirements and risks for businesses using negative option features and will allow consumers to more easily cancel unwanted subscriptions and memberships.

“If consumers want to cancel a subscription, they should not have to go on a fishing expedition,” said Attorney General Bonta. “Just as businesses make it easy to sign up for a subscription, they need to respect customers who later want to end that subscription. Deception and dark patterns have no place in consumer markets, and the proposed Negative Option Rule is the change consumers have been rightly demanding for years. I’m proud to support this effort by the FTC and to offer additional recommendations alongside my fellow attorneys general.”

The FTC announced the proposed updates to its Negative Option Rule on March 23, 2023 and asked for public comment to help inform its decision-making. The coalition of attorneys general is submitting a supportive comment letter in response to that request. The proposed Negative Option Rule would, among other things:

• Regulate all additional types of negative-option practices, including automatic renewals, free trial offers, and continuity plans;
• Cover all offers made in all media, “including, but not limited to the internet, telephone, in-print, and in-person transactions”;
• Require businesses to provide a simple mechanism for consumers to cancel a negative option subscription;
• Prohibit misrepresentations of any material fact regarding the entire agreement, not just facts related to a negative option feature;
• Require businesses to obtain the consumer’s express informed consent before charging the consumer, including obtaining the consumer’s affirmative consent to the negative- option feature separate from any other portion of the offer; and
• Preserve state authority to regulate negative-option marketing and to enact greater protections.

In their letter, the attorneys general express support for the above protections and propose additional clarifications and improvements. The attorneys general urge the FTC to:

• Require businesses offering free trials to obtain an additional round of consent before charging a consumer at the completion of the free trial;
• Clarify that cancellation mechanisms must be cost effective, timely, and easy to use;
• Broaden the forms that a consumer can cancel a recurring contract; and
• Require businesses to provide negative option reminders in additional forms, not just through the same medium that the consumer used to consent to the negative-option feature in the first place.

California already has in place a negative option statute, which makes it unlawful, in part, for a business to “[f]ail to present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner “ and to “[f]ail to provide an acknowledgment that includes the automatic renewal or continuous service offer terms, cancellation policy, and information regarding how to cancel in a manner that is capable of being retained by the consumer.” The FTC’s proposed amendments to its Negative Option Rule would set clear, enforceable requirements nationwide for all negative-option practices in all media, while still allowing states — like California — to maintain and enact stricter laws in this area.

In sending this comment letter, Attorney General Bonta joins the attorneys general of Alabama, Arizona, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Vermont, Washington, and Wisconsin.

A copy of the comment letter can be found here.

Original source can be found here.