Negative Option Marketing

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Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate the legal risk of campaigns and promotions. Click here to download the entire Tool Kit, and tune in to the Ad Law Tool Kit Show podcast, to hear the authors of this chapter dive deeper into the issue of negative option and continuity marketing in this week’s episode.

The Federal Trade Commission (FTC), state attorneys general, and class action plaintiffs continue to scrutinize negative option and continuity offers. Negative option marketing can include pre-notification negative option plans, continuity programs, automatic renewals, and free-to-pay (or discounted price-to-pay) conversions.Continue Reading Negative Option and Continuity Marketing: An Excerpt from the Advertising Law Tool Kit

The first episode of Venable’s Ad Law Tool Kit Show, Season 2,is now available. Listen to “Negative Option Marketing: Part 2” here, or search for it in your favorite podcast player.

Negative option marketing can include pre-notification negative option plans, continuity programs, automatic renewals, and free-to-pay conversions. This marketing strategy continues to invite scrutiny from the Federal Trade Commission (FTC), state attorneys general, and class action plaintiffs.

In this episode, I talk to my co-host on this podcast, Shahin Rothermel, and
Venable partner Ari Rothman about the keys to success in avoiding investigations and liability.Continue Reading Listen to Venable’s Ad Law Tool Kit Show Podcast– “Negative Option Marketing: Part 2”

This week, California amended its automatic renewal and continuous service offer law (ARL). Key provisions include the addition of “free-to-pay conversions,” consent obligations, misrepresentation prohibitions, request for cancellation procedures, price change notifications, and reminder and recordkeeping requirements. The new law takes effect July 1, 2025.

Express Affirmative Consent Required

The law will require “express affirmative consent” for all automatic renewal and continuous service offers. While the ARL provides no definition, class action plaintiffs’ attorneys, the California attorney general (AG), and California’s Automatic Renewal Taskforce (CART) are likely to interpret it similarly to the Federal Trade Commission’s (FTC) definition of “affirmative express consent,” i.e., “freely given, specific, informed, and unambiguous indication of an individual consumer’s wishes demonstrating agreement by the individual, such as by an affirmative action, following a clear and conspicuous disclosure to the individual.”Continue Reading California Amends Autorenewal Law, with Stricter Consent Requirements and a “One Save” Rule: Fast VAST Update

Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate their organization’s legal risk. Click here to download the entire Tool Kit, and tune in to the Ad Law Tool Kit Show podcast, to hear the authors of this chapter dive deeper into the issue of negative option and continuity marketing in this week’s episode.

The Federal Trade Commission (FTC), state attorneys general, and class action plaintiffs continue to scrutinize negative option and continuity offers. Negative option marketing can include pre-notification negative option plans, continuity programs, automatic renewals, and free-to-pay (or discounted price-to-pay) conversions.

The key to success in avoiding investigations and liability can be as simple as making clear and complete disclosures (prominent, clearly explained, and placed where they will be read and where consumers’ attention is focused); obtaining consumers’ express, informed affirmative consent to the negative option offer; providing a simple cancellation mechanism; sending post-order confirmations and renewal reminders; and ensuring that refunds and cancellations are processed in accordance with disclosed policies.Continue Reading Negative Option and Continuity Marketing: An Excerpt from the Advertising Law Tool Kit

Episode 3 of the Ad Law Tool Kit Show, “Negative Option and Continuity Marketing,” is now available. Listen here, or search for it in your favorite podcast player.

Negative option and continuity offers have been under the microscope lately as the Federal Trade Commission (FTC), state attorneys general, and class action plaintiffs continue to scrutinize them.

In this episode, I talk to Venable partner and my co-host on this podcast, Shahin Rothermel, about how, in order to avoid investigations, marketers must ensure clear, prominent disclosures about offer terms, gain express consent from consumers, simplify cancellation processes, send confirmations and reminders … the list goes on. For companies that employ these marketing tools, what are the keys to avoiding liability?Continue Reading Listen to Episode 3 of Venable’s Ad Law Tool Kit Show – “Negative Option and Continuity Marketing”

Earlier this week, the Federal Trade Commission (FTC) held its informal hearing on the proposed amendments to the Negative Option Rule. Clearly on display was not only industries’ concern about the impact of the proposed rule, but also concern about the FTC’s haste toward implementing the rule changes.

As a refresher, the FTC generally must promulgate rules under the Magnuson-Moss Warranty Federal Trade Commission Improvements Act (Mag-Moss) instead of the less-stringent Administrative Procedures Act. Under Mag-Moss, the FTC must first issue an advanced notice of proposed rulemaking (ANPR) seeking public comment, issue a notice of proposed rulemaking (NPRM), have reason to believe that the conduct at issue is “prevalent,” conduct informal hearings allowing parties to present their views and finally publish the final rule with a “statement of basis and purpose” accompanying the rule.Continue Reading Unpacking the FTC’s Negative Option Rule Informal Hearing

On December 20, 2023, New York Attorney General Letitia James filed a Petition in state court alleging Sirius XM Radio’s autorenewal practices violated New York’s autorenewal law. In the lawsuit, New York alleges that Sirius XM, an audio entertainment company headquartered in New York, made it difficult for customers to cancel their subscriptions.

New York’s automatic renewal law requires any business that makes an automatic renewal offer or continuous service offer to provide a cost-effective, timely, and easy-to-use mechanism for cancellation. The AG alleges that Sirius violated this requirement by:Continue Reading New York Attorney General: Sirius XM Customers “Frustrated” When Trying to Cancel Subscriptions

In March, the Federal Trade Commission (FTC) asked for comments on a proposal to replace the Prenotification Negative Option Rule with a more expansive Negative Option Rule. Now that the FTC has had the chance to review those comments, the FTC has set an informal hearing to allow for testimony from six of the over 1,000 commenters.

Each presenter will be limited to ten minutes but can supplement their remarks with written content. The FTC has appointed Carol Fox Foelak, an administrative law judge at the Securities and Exchange Commission (SEC), to serve as presiding officer.Continue Reading New Year, New Rule: FTC to Review Updates to Negative Option Rule During January Informal Hearing

Last month, the National Advertising Division of BBB National Programs reviewed Pier 1’s subscription rewards program and recommended that the company provide clearer disclosures of the automatic renewal program.

The case, brought as part of NAD’s monitoring activities, analyzed the Pier 1 Rewards program, a subscription-based customer loyalty program through which customers are charged a recurring monthly or annual fee. The membership provides a 10% discount sitewide and free shipping and returns on eligible items.Continue Reading The National Advertising Division Recommends That Pier 1 Modify Subscription Disclosures

It’s here! The 11th edition of Venable’s popular Advertising Law Tool Kit is now available for download. This annual resource compiles a broad spectrum of marketing-related topics, background information, and checklists into an easy-to-access guide, authored by some of the most experienced attorneys in the industry. Download this year’s Tool Kit or bookmark the link…