How About We Strengthen the FTC’s Negative Option Rule?

How many recurring subscriptions do you have? And how many of these companies with your credit card info contact you before they automatically renew? Only a small percentage of my subscription-based relationships do me the favor (after I change my auto-renew preferences), and I imagine the same is true for you.

The FTC uses the phrase “negative option marketing” broadly to refer to a category of commercial transactions in which sellers interpret a customer’s failure to take an affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services.

According to The National Law Review, The Federal Trade Commission has recently finalized amendments to the Negative Option Rule, which represents a significant overhaul of the regulatory framework governing how companies handle subscription services and automatic renewals. The original rule, established in 1973, was focused primarily on protecting consumers from deceptive practices in physical goods such as book and record clubs. However, with the rise of e-commerce, the need for more robust protections for online subscriptions has grown significantly. The FTC’s amendments aim to address these issues and bring more transparency and fairness to this business model.

Naturally, companies that rely on subscription incomes—and there are millions of them from Amazon to Apple on down—don’t want to change. Thus, the Interactive Advertising Bureau (IAB), along with a coalition of leading trade associations, filed a lawsuit against the Federal Trade Commission challenging its changes to rules governing subscription renewals. The suit asserts that the FTC failed to adhere to proper procedures, including conducting a comprehensive economic analysis.

Lartease Tiffith, IAB’s Executive Vice President for Public Policy, said, “While IAB supports reasonable regulation, these new rules threaten a business model essential to companies of all sizes across various industries—and to consumers. The FTC’s rules could eliminate free trials and straightforward renewals, replacing them with cumbersome forms and legal jargon–ultimately costing consumers both time and money,” he added.

IAB says it wants to save people time and money, but is IAB truly on the side of the customer, or “user” to use tech’s jargon? I’m a subscriber to multiple services and I want to opt in every time. I’d also like to suggest that brands and their representatives have to be on the customer’s side, consistently and company-wide, or suffer the consequences of a tainted reputation and diminished sales.