Negative Option Rule

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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