Negative Option Marketing

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The term “negative option” generally references subscriptions, automatic renewals, continuity plans, or other programs where consumers continue to be charged unless they cancel.

However, a recent New York federal court held that unless a consumer unchecks a box, a one-time shipping protection fee that is automatically added to that consumer’s cart can also be a “negative option” under ROSCA.

The decision could significantly expand the reach of ROSCA, both by applying the law to a one-time add-on fee and by giving private plaintiffs a potential avenue to pursue alleged ROSCA violations under California law. The ruling could have broader consequences for common e-commerce checkout practices that require consumers to affirmatively decline optional charges.

Continue Reading One-Time Shipping Protection Fee May Trigger ROSCA, Court Rules: A Fast VAST Update

Continuing with its aggressive enforcement of negative option marketing, the Federal Trade Commission (FTC) announced a $35 million settlement with online digital photo and video platform Shutterstock to resolve allegations that Shutterstock violated Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) in connection with its subscription services. The FTC alleged that Shutterstock failed to disclose material terms before billing, charged consumers for products without their informed consent, and made cancellation difficult.

Shutterstock offers consumers several plans for licensing content on its website, varying in price and in the number of downloads available. The complaint alleges that Shutterstock offered most of its content through online subscriptions since at least 2020.

Continue Reading Shutterstock Settles with FTC for $35 Million for Subscription and Negative Option Marketing Practices

From one-click checkouts to autofilled payment fields, the modern payment experience is built on convenience. Consumers have come to expect that apps, websites, and even their mobile devices will seamlessly store and deploy their payment credentials with minimal friction. But beneath this ease lies a growing legal tension, particularly in subscriptions and automatic renewals programs, where sales and marketing laws require clear disclosures before obtaining the consumer’s billing information.

ROSCA Compliance and Subscription Disclosure Timing

The Federal Trade Commission’s (FTC) lawsuit against Uber Technologies illustrates how this tension plays out in practice. The case focuses on Uber’s “Uber One” subscription program and how subscription enrollment is embedded within an app ecosystem where users have already stored payment credentials for one-off transactions. Under the Restore Online Shoppers’ Confidence Act (ROSCA), material subscription terms must be disclosed before obtaining consumers’ billing information.

Continue Reading Stored Payment Credentials and ROSCA: Lessons from the FTC’s Uber Case

On Wednesday, the Federal Trade Commission (FTC) issued a call for comments in response to its Advance Notice of Proposed Rulemaking Regarding Negative Option Marketing Practices.

The call for comments comes after the Eighth Circuit struck the FTC’s previous amended Negative Option Rule because the FTC did not issue a preliminary analysis of the benefits…

The U.S. Court of Appeals for the Eighth Circuit vacated the Federal Trade Commission’s Rule Concerning Subscriptions and Other Negative Option Plans (often referred to as the “Click-to-Cancel” rule) on July 8, just days before the FTC was set to begin enforcement of the rule.

The decision resolved various consolidated petitions challenging the rule on grounds that it exceeded the scope of the FTC’s authority, was not promulgated in accordance with necessary rulemaking procedures, and was overly broad. The winning argument, though, was that the FTC skipped the critical step of issuing a preliminary analysis of the benefits and effects of the proposed rule and any reasonable alternatives, because it initially failed to treat the rule as “economically significant” to the national economy.

Continue Reading Eighth Circuit Cancels FTC Negative Option Rule: What Does It Mean?

On Friday, ​the Federal Trade Commission voted to defer the compliance deadline for the amended Negative Option Rule by 60 days. The Commission issued a statement on the new deadline.

The delay reflects the FTC’s response to various commenters who expressed concern that, “given the complexities” of these provisions, it would take a substantial…

This week, the Federal Trade Commission (FTC) filed a lawsuit in federal court against rideshare and delivery company Uber for allegedly deceptive subscription practices, including making it unreasonably difficult to cancel.

In the accompanying press release, FTC Chair Andrew Ferguson made clear that regulatory scrutiny of negative option and continuity programs will remain a priority: “Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel. The Trump-Vance FTC is fighting back on behalf of the American people.” The agency voted 2-0-1 to file the complaint, with Commissioner Mark R. Meador recused.

Continue Reading FTC Makes Clear It Will Continue Regulating Subscription Services and Signals Enforcement Priority for Negative Option Rule in Lawsuit Against Uber

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The Federal Trade Commission, state attorneys general, and class action plaintiffs continue to scrutinize negative option and continuity offers, including automatic renewals, free-to-pay conversions, and continuity programs.

The FTC’s updated Negative Option Rule mandates clear disclosures, unambiguous affirmative consent, and simple cancellation mechanisms. Marketers must disclose material terms such as price, frequency, and cancellation details prominently and understandably, including on mobile devices. Consumers should give informed consent and receive post-transaction confirmations and renewal reminders. Companies must honor cancellation and refund policies and address complaints effectively.

Continue Reading Negative Option and Continuity Marketing

Ending speculation and uncertainty about whether new leadership at the Federal Trade Commission (FTC) would repeal or continue to defend the agency’s Negative Option Rule, which regulates offerings such as autorenewal of subscription services, this week the agency filed a brief at the Eighth Circuit defending the rule—something of a surprise.

We previously discussed the arguments raised by industry groups that are challenging the rule. Broadly, the challengers assert that the rule exceeds the FTC’s statutory authority, is procedurally defective, and is arbitrary and capricious. The Eighth Circuit previously denied petitioners’ request to stay the rule from taking effect pending litigation.

Continue Reading FTC Files Brief Defending “Click to Cancel” Negative Option Rule

Last week, a security services company and several trade groups filed their merits brief in the U.S. Court of Appeals for the Eighth Circuit challenging the Federal Trade Commission’s (FTC) newly adopted Negative Option Rule, also called Click-to-Cancel. The rule introduces a host of requirements for companies selling goods or services with a negative option feature in both consumer and B2B transactions, as we outlined last year. Notably, a negative option seller must make cancellation as simple as signing up, including providing an easy online cancellation method if consumers signed up online.

The rule went partially into effect on January 14, 2025, with the prohibition on misrepresentations of material facts relating to the promotion or offering for sale of any good or service with a negative option. The remainder of the rule covering consent and cancellation requirements takes effect in May 2025.

The court previously denied petitioners’ request to stay the rule from taking effect pending litigation.

Continue Reading FTC’s “Click-to-Cancel” Rule Challenged by Industry in the Eighth Circuit