negative option

Subscribe to negative option via RSS

Last month, two association groups, the Consumer Federation of America (CFA) and the American Economic Liberties Project (AELP), submitted a Petition for Renewed Click to Cancel Rulemaking attempting to restart the Federal Trade Commission’s (FTC) rulemaking process. The petition asks the FTC to revive the rulemaking process by reopening the Rule Concerning Subscriptions and Other Negative Option Plans, often referred to as the “Click-to-Cancel” rule.

In July, a federal appeals court vacated the Click-to-Cancel rule, holding that it exceeded the scope of the FTC’s authority, was not promulgated in accordance with necessary rulemaking procedures, and was overly broad.Continue Reading Industry Groups Urge FTC to Revive Click-to-Cancel Rulemaking on Subscription and Negative Option Plans

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?

The Federal Trade Commission (“FTC” or “the Commission”) has clearly subscribed to enforcing ROSCA recently.  On Tuesday, the FTC filed a complaint against DIRECTV’s negative option program and contract pricing structure under Section 5 of the FTC Act and ROSCA.

In the complaint, the FTC alleged that DIRECTV required customers to agree to a mandatory 24-month contract to receive television programming; customers who canceled their subscriptions before 24 months were charged an early cancellation fee.  Although the rates were set at a specific monthly charge for the first year of a 2-year customer agreement, in the second year of the agreement, the FTC alleged that DIRECTV would increase the monthly charges by 50-70% higher than customers paid in the first year.  After the first year of the agreement, customers either had to pay significant cancellation fees or pay the higher monthly price.  
Continue Reading FTC Dishes Out ROSCA Complaint with Focus on Disclosures