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If you’re offering any products or services involving a negative option or automatic renewal plan, pay close attention to the FTC’s announcement today of a proposed rule that would drastically alter requirements for negative option disclosures while simultaneously granting the agency authority to seek redress and civil penalties for misrepresentations unrelated to the negative option transaction itself, such as claims related to underlying products, features, and services.  Among other things, the rule as proposed would require cancellation be “at least as easy to use as the method the consumer used to initiate the Negative Option Feature,” obtain consent before trying to “save” a cancellation attempt, and provide annual reminders for services that do not involve the physical delivery of goods.

In her dissent, Commissioner Wilson characterized the proposed rule as an “end-run around the Supreme Court’s decision in AMG” and detailed a host of substantive and procedural issues with the proposed rule.

Further analysis and our take below.…

Continue Reading FTC Proposes Massive Expansion of Negative Option Rule; Would Provide Redress and Civil Penalty Authority for Deceptive Practices Unrelated to the Negative Option Transaction

For $9.99 per month, Pier 1 offers Pier 1 Rewards, a loyalty program that includes benefits such as a 10% discount on all purchases and free shipping and returns on eligible items. Until recently, when a consumer added an item to a cart, the company would automatically also add the Pier 1 Rewards membership to…

These days, consumers can obtain everything from newspapers to meal kits to credit monitoring services through subscriptions. The prevalence of these services, and the ease with which consumers can sign up, have gotten the attention of regulators who are concerned that some negative option marketing might confuse or trick consumers. The CFPB, FTC, and state AGs have been particularly vocal about practices they deem “dark patterns,” and continue to focus on the area.     

Today, the CFPB put out guidance warning covered companies and service providers that “dark patterns” surrounding negative option marketing violate the Consumer Financial Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices. As the circular makes clear, the CFPB has already brought enforcement actions alleging deceptive practices around negative options (see this case against a consumer reporting agency, and this case against a company that provided registration and payment services to organizers of events and races). The announcement also notes that the CFPB’s approach to negative option “dark patterns” is generally harmonized with that of the Federal Trade Commission (the FTC put out its own Enforcement Policy Statement Regarding Negative Option Marketing in October 2021). The guidance highlights the need for companies using negative option marketing to ensure that consumers: 1) understand the material terms of the negative option; 2) provide informed consent before being charged; and 3) are able to easily cancel recurring charges.…

Continue Reading Regulators Continue to Focus on “Dark Patterns” in Negative Option Marketing

On Friday, the FTC announced what would ordinarily be an unremarkable enforcement action against a company for unsubstantiated earnings claims.  The FTC alleges that WealthPress, an investment advice company purporting to offer training from experts on trading strategies, made a series of unsubstantiated earnings claims such as “make $24,840 or more every single week,” “track…

If you follow our blog, you already know that there have been a number of significant developments in the world of advertising law over the past 12 months. In this post, we highlight ten of those developments and consider what they might mean for the future.

  • Dark Patterns: Any practices that could manipulate or mislead
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Rihanna’s Savage X Fenty is an online subscription service that sells women’s lingerie. Like many other subscription services, they have faced scrutiny over how they advertise automatic renewals. In February 2020, Tina.org sent letters to the FTC and CA district attorneys urging them to investigate the company’s marketing practices. In August 2022, the DAs filed…

Earlier this week, we posted that  a plaintiff filed a proposed class action against the NFL over its automatic renewal practices. The complaint alleges that the NFL used “dark patterns” to enroll consumers in its NFL+ subscription without consent and that it then made it difficult for them to cancel. Although we don’t…

TINA.org recently announced that it had filed complaints with the FTC and the Connecticut Department of Consumer Protection, urging them to investigate Hello Fresh’s marketing practices related to a campaign advertising “free” meals in order to encourage consumers to sign up for a subscription. The complaints touch on a number of issues we post about…