Carson City, NV - Nevada Attorney General Aaron D. Ford sent a letter to the Federal Trade Commission (FTC) urging the adoption of sorely needed regulations to prevent Nevadans and consumers around the country from being deceived by negative option marketing schemes. After receiving the letter penned by AG Ford and 22 other attorneys general, the FTC is considering whether to use its rulemaking authority to expand existing negative option regulations.
Negative option marketing occurs when a marketer presents consumers with an offer, usually in the form of a subscription, and the consumers' silence or failure to take action in response is deemed acceptance of the offer. One especially problematic type of negative option offer involves a so-called "free" trial. Consumers are offered a free trial period for a product or service but have to submit their billing information to receive the promotion. However, the free trial has additional terms, which are not clearly disclosed, stating that unless consumers cancel the goods or services, they are agreeing to continue to receive and pay for them.
"With some types of offers, consumers are getting more than they bargained for," said AG Ford. "In my Bureau of Consumer Protection, our goal is to protect the privacy and pockets of Nevadans, which includes advocating for their rights as consumers."
Current regulations, adopted in 1973, regulate only one type of negative option marketing - the delivery of merchandise where consumers receive periodic announcements that merchandise will be delivered unless they decline within a set time frame, such as book-of-the-month clubs.
The attorneys' general letter urges the FTC to expand its regulations to achieve the following:
- Informed Consent - In addition to consenting to any trial offer, sellers should have to obtain a separate consent to be charged for goods or services after the trial period has ended;
- Periodic Notices - Sellers should be required to send regular notifications that consumers are enrolled in a negative option plan, disclose the timing, amount, and method by which the seller bills the consumers for the renewal, and provide a convenient method to cancel the goods or services;
- Define Simple Cancellation Processes - Consumers should be allowed to cancel their memberships by the same method as enrollment; and
- Refunds - Consumers who are unwittingly enrolled in negative option plans should be entitled to a refund from the date of enrollment.
In addition to AG Ford, attorneys general from the following states and territory participated in this letter: Colorado, Delaware, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Dakota, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin and the District of Columbia.
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