Legal Brief: Negative Option Rule Could Become Law in April 2025
December 18, 2024
Types : Bylined Articles
Despite security industry opposition, pending litigation, and attempts to delay implementation, integrators should be prepared to comply
In my June 2023 column, I wrote about an initiative by the Federal Trade Commission (FTC) to modernize the 1973 Negative Option Rule for the digital economy. The proposed amendments are intended to protect consumers from recurring charges for products or services they do not want and cannot readily cancel.
On Oct. 16, 2024, the FTC announced the final rule (now retitled the “Rule Concerning Recurring Subscriptions and Other Negative Option Plans”). The updated rule expands coverage from just negative option purchases made online to negative option programs in any media, including telephone, in-person, and printed material.
The new rule defines the negative option feature as “a contract provision under which the consumer’s silence or failure to take affirmative action to reject a good or service or to cancel the agreement is interpreted by the negative option seller as acceptance or continuing acceptance of the offer.” This includes automatic renewals, continuity plans, free-to-pay conversions or fee-to-pay conversions, and prenotification negative option plans.