90476 Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 

1Save was defined in the proposed Rule to mean 

an attempt by a seller to present any additional 

offers, modifications to the existing agreement, 

reasons to retain the existing offer, or similar 

information when a consumer attempts to cancel a 

negative option feature. Proposed Rule § 425.2(f). 

2See 16 CFR 1.11 (‘‘Commission’s Rules of 

Practice’’ or ‘‘Commission Rules’’); cf. 

Impersonation Rule, 89 FR 15072 (Feb. 29, 2024). 

3See 16 CFR 1.16. 

FEDERAL TRADE COMMISSION 

16 CFR Part 425 

RIN 3084–AB60 

Negative Option Rule 

AGENCY: Federal Trade Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Trade 

Commission (‘‘FTC’’ or ‘‘Commission’’) 

issues final amendments to the 

Commission’s trade regulation ‘‘Rule 

Concerning Use of Prenotification 

Negative Option Plans,’’ retitled the 

‘‘Rule Concerning Recurring 

Subscriptions and Other Negative 

Option Programs’’ (‘‘Rule,’’ ‘‘final Rule’’ 

or ‘‘Negative Option Rule’’). The final 

Rule now applies to all negative option 

programs in any media. This document 

also contains the text of the final Rule, 

the Rule’s Statement of Basis and 

Purpose (‘‘SBP’’), and a final regulatory 

analysis. 

DATES: 

Effective date: This rule is effective 

January 14, 2025. 

Compliance date: Regulated entities 

have until May 14, 2025 to comply with 

§§ 425.4 through 425.6.

ADDRESSES: Relevant portions of the

record of this proceeding, including this

document, are available at https://

www.ftc.gov.

FOR FURTHER INFORMATION CONTACT: 

Katherine Johnson, Attorney, (202) 326– 

2185, kjohnson3@ftc.gov, Division of 

Enforcement, Bureau of Consumer 

Protection, Federal Trade Commission, 

600 Pennsylvania Ave. NW, 

Washington, DC 20580. 

SUPPLEMENTARY INFORMATION: 

I. Overview

The Commission commenced this

proceeding because it had reason to 

believe unfair and deceptive negative 

option practices are widespread in the 

marketplace. Negative option programs 

can provide substantial benefits for 

sellers and consumers. However, 

consumers cannot realize these benefits 

when sellers make material 

misrepresentations to induce consumers 

to enroll in such programs, fail to 

provide important information, bill 

consumers without their consent, or 

make cancellation difficult or 

impossible. Unfair and deceptive 

negative option practices have been a 

persistent source of consumer harm for 

decades, saddling shoppers with 

recurring payments for products and 

services they never intended to 

purchase nor wanted to continue 

buying. In the past, the Commission 

sought to address these practices 

through individual law enforcement 

actions and a patchwork of laws and 

regulations. Nevertheless, problems 

persist, as demonstrated by both a 

steady stream of State and Federal law 

enforcement actions and thousands of 

consumer complaints each year. To 

address these practices, the Commission 

proposed amending the current 

Negative Option Rule to establish clear, 

enforceable performance-based 

requirements for all negative option 

features in all media. The Commission 

solicited comments first in an advance 

notice of proposed rulemaking 

(‘‘ANPR’’) and then on proposed 

amendments in a notice of proposed 

rulemaking (‘‘NPRM’’). The Commission 

designed these amendments to ensure 

consumers understand what they are 

purchasing and allow them to cancel 

their participation without undue 

burden. 

Among other things, this final Rule (1) 

prohibits misrepresentations of any 

material fact made while marketing 

using negative option features; (2) 

requires sellers to provide important 

information prior to obtaining 

consumers’ billing information and 

charging consumers; (3) requires sellers 

to obtain consumers’ unambiguously 

affirmative consent to the negative 

option feature prior to charging them; 

and (4) requires sellers to provide 

consumers with simple cancellation 

mechanisms to immediately halt all 

recurring charges. 

The Commission now promulgates a 

final Rule. Pursuant to 15 U.S.C. 

57a(a)(1)(B), the Rule, inter alia, defines 

the following acts and practices as 

unfair or deceptive within the meaning 

of section 5 of the FTC Act: 

• to misrepresent any material fact

made while marketing using a negative 

option feature (§ 425.3); 

• to fail to clearly and conspicuously

disclose material terms prior to 

obtaining a consumer’s billing 

information in connection with a 

negative option feature (§ 425.4); 

• to fail to obtain a consumer’s

express informed consent to the 

negative option feature before charging 

the consumer (§ 425.5); and 

• to fail to provide a simple

mechanism to cancel the negative 

option feature and immediately halt 

charges (§ 425.6). 

Further, the Rule, consistent with the 

final sentence of 15 U.S.C. 57a(a)(1)(B) 

includes requirements prescribed for the 

purpose of preventing such acts or 

practices. 

The final Rule differs from the 

proposed Rule in two significant ways. 

First, the proposed Rule would have 

required sellers to provide annual 

reminders to consumers of the negative 

option feature. Second, the proposed 

Rule would have prohibited sellers from 

forcing consumers to receive saves 1

without first obtaining consumers’ 

unambiguously affirmative consent. The 

Commission has considered comments 

both supporting and opposing these 

proposed provisions. As explained in 

the section-by-section analysis, the 

Commission declines to adopt these 

provisions of the proposed Rule at this 

time. Instead, the Commission plans to 

seek further comment through a 

supplemental NPRM (‘‘SNPRM’’), and 

therefore, keeps the record open on 

these issues.2

Finally, in response to the comments, 

the Commission adds two definitions 

and two provisions to the final Rule for 

clarity. The final Rule explicitly defines 

the terms ‘‘material’’ and ‘‘interactive 

electronic medium’’ consistent with 

how they were defined and discussed in 

the NPRM. Additionally, the final Rule 

includes a severability provision and a 

provision allowing requests for 

exemptions from the final Rule 

consistent with the Commission’s Rules 

of Practice.3

II. Background

A. Statutory Authority

The Commission promulgates the

final Negative Option Rule, 16 CFR part 

425 pursuant to section 18 of the FTC 

Act, 15 U.S.C. 57a, the Administrative 

Procedure Act (‘‘APA’’), 5 U.S.C. 533; 

and part 1, subpart B of the 

Commission’s Rules of Practice, 16 CFR 

1.7–1.20. Section 18 permits the 

Commission to promulgate, amend, and 

repeal trade regulation rules that define 

with specificity acts or practices that are 

unfair or deceptive within the meaning 

of section 5(a)(1) of the FTC Act, 15 

U.S.C. 45(a)(1); and allows the 

Commission to prescribe requirements 

for the purpose of preventing these 

unfair or deceptive acts and practices. 

B. Negative Option Marketing

1. Negative Option Programs

Negative option programs come in a

variety of forms, but all share a central 

feature: each contain a term or condition 

that allows a seller to interpret a 

customer’s silence, or failure to take an 


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4The Commission’s Telemarking Sales Rule 

defines a negative option feature as a provision in 

an offer or agreement to sell or provide any goods 

or services ‘‘under which the customer’s silence or 

failure to take an affirmative action to reject goods 

or services or to cancel the agreement is interpreted 

by the seller as acceptance of the offer.’’ 16 CFR 

310.2(w). 

5See, e.g., United States v. Adobe, Inc., No. 5:24– 

cv–03630 (N.D. Cal. 2024). 

6News/Media Alliance (‘‘N/MA’’), FTC–2023– 

0033–0873; see also Association of National 

Advertisers (‘‘ANA’’), FTC–2023–0033–1001; 

National Retail Federation (‘‘NRF’’), FTC–2023– 

0033–1005. Citations herein to comments are cited 

as the name of commenter and unique identifier 

(e.g., FTC–2023–0033–ll). Comments are 

available online at regulations.gov, Negative Option 

Rule (NPRM), FTC–2023–0033–0001, https://

www.regulations.gov/document/FTC-2023-0033- 

0001. 

7N/MA, FTC–2023–0033–0873; Sirius XM Radio 

Inc. (‘‘Sirius XM’’), FTC–2023–0033–0857; NCTA— 

The Internet & Television Association (‘‘NCTA’’), 

FTC–2023–0033–0858; Interactive Advertising 

Bureau (‘‘IAB’’), FTC–2023–0033–1000. 

8See IAB, FTC–2023–0033–1000; Sirius XM, 

FTC–2023–0033–0857; Joint Comment from 

Entertainment Software Association, Digital Media 

Association, and Motion Picture Association 

(‘‘ESA’’), FTC–2023–0033–0867. 

9N/MA, FTC 2023–0033–0873; NRF, FTC–2023– 

0033–1005; ANA, FTC–2023–0033–1001. 

10See, e.g., FTC v. FloatMe Corp., No. 5:24–cv– 

00001 (W.D. Tex. 2024); United States v. Adobe, 

Inc., No. 5:24–cv–03630 (N.D. Cal. 2024); FTC v. 

WealthPress, Inc., No. 3:23–cv–00046 (M.D. Fla. 

2023); FTC v. Bridge It, Inc., No. 1:23–cv–09651 

(S.D.N.Y. 2023); FTC v. Amazon.com, Inc., No. 

2:23–cv–0932 (W.D. Wash. 2023); see also n.60. 

11E.g., FTC v. Triangle Media Corp., No. 3:18–cv– 

01388 (S.D. Cal. 2018); FTC v. Credit Bureau Ctr., 

LLC, No. 1:17–cv–00194 (N.D. Ill. 2017); FTC v. JDI 

Dating, Ltd., No. 1:14–cv–08400 (N.D. Ill. 2014); 

FTC v. One Techs., LP, No. 3:14–cv–05066 (N.D. 

Cal. 2014); FTC v. Health Formulas, LLC, No. 2:14– 

cv–01649 (D. Nev. 2014); FTC v. NutraClick, LLC, 

No. 2:16–cv–06819 (C.D. Cal. 2016); FTC v. XXL 

Impressions, LLC, No. 1:17–cv–00067 (D. Me. 2017); 

FTC v. AAFE Prods. Corp., No. 3:17–cv–00575 (S.D. 

Cal. 2017); FTC v. Pact, Inc., No. 2:17–cv–1429 

(W.D. Wash. 2017); FTC v. Tarr, No. 3:17–cv–02024 

(S.D. Cal. 2017); FTC v. AdoreMe, Inc., No. 1:17– 

cv–09083 (S.D.N.Y. 2017); FTC v. 

DOTAuthority.com, Inc., No. 0:16–cv–62186 (S.D. 

Fla. 2016); FTC v. BunZai Media Grp., Inc., No. 

2:15–cv–04527 (C.D. Cal. 2015); FTC v. 

RevMountain, LLC, No. 2:17–cv–02000 (D. Nev. 

2017). 

affirmative action, as acceptance of an 

offer.4 Negative option programs 

generally fall into four categories: 

prenotification plans, continuity plans, 

automatic renewals, and free trial (i.e., 

free-to-pay or nominal-fee-to-pay) 

conversion offers. 

Prenotification plans are the only 

negative option practice currently 

covered by the Commission’s current 

Negative Option Rule, originally 

promulgated in 1973. Under such plans 

(e.g., book-of-the-month clubs), sellers 

provide periodic notices offering goods 

to participating consumers and then 

send—and charge for—those goods only 

if the consumers take no action to 

decline the offer. The periodic 

announcements and shipments can 

continue indefinitely. In continuity 

plans, consumers agree in advance to 

receive periodic shipments of goods or 

provision of services (e.g., bottled water 

delivery), which they continue to 

receive until they cancel the agreement. 

In automatic renewals, sellers (e.g., a 

magazine publisher, credit monitoring 

service provider, etc.) automatically 

renew consumers’ subscriptions when 

they expire, unless consumers 

affirmatively cancel the subscriptions. 

Finally, in free-to-pay plans, consumers 

receive goods or services for free (or at 

a nominal fee) for a trial period. After 

the trial period, sellers automatically 

begin charging a fee (or higher fee) 

unless consumers affirmatively cancel 

or return the goods or services. 

Some negative option offers include 

upsell or bundled offers, where sellers 

use consumers’ billing data to sell 

additional products from the same seller 

or pass consumers’ billing data to a 

third party for their sales. An upsell 

occurs, e.g., when a consumer 

completes a first transaction and then 

receives a second solicitation for an 

additional product or service. A 

bundled offer occurs, e.g., when a seller 

packages two or more products or 

services together. 

Importantly, negative option programs 

are distinct from other continuing 

agreements such as installment 

contracts. In an installment contract, 

consumers are obligated for the entire 

contractual period for the entire 

contract. A prime example of this type 

of transaction is a contract for 

purchasing a vehicle, which outlines 

terms, such as price, interest rate, and 

payment schedule. The contract thus 

allows the consumer to pay the 

purchase price of the vehicle over time. 

Consumers’ failure to pay amounts due 

under an installment agreement may 

bring the total balance due, and may 

trigger halting performance, or provide 

the seller with other contractual rights. 

A negative option, in contrast, merely 

determines whether a seller may 

continue to send, and charge for, goods 

or provide services without the 

consumer’s further action. Notably, a 

contract could have both installment 

and negative option features. Take, for 

instance, a software license agreement. 

A consumer may purchase a software 

license for a year, in which the 

consumer is obligated for the entire 

year, payable monthly, to renew 

automatically at the conclusion of the 

year unless the consumer cancels the 

agreement.5 Canceling the agreement 

during the first year does not void a 

consumer’s obligation to pay for the 

whole first year, but it does terminate 

the consumer’s responsibility for the 

next year. 

2. Prevalence of Deceptive or Unfair 

Negative Option Acts and Practices 

Negative option programs are 

widespread in the marketplace and can 

provide substantial benefits for sellers 

and consumers. For businesses, the 

benefits of negative option marketing 

include ‘‘greater revenue predictability, 

customer base continuity, and the 

ability to better plan in advance.’’ 6 For 

consumers, such benefits may include 

opportunities to explore new products 

prior to purchase (e.g., free trials),7

broader selections at lower prices and 

transaction costs,8 and the convenience 

of uninterrupted products or services.9

However, consumers cannot reap these 

benefits when marketers misrepresent 

material facts, fail to make adequate 

disclosures, bill consumers without 

their consent, or make cancellation 

difficult or impossible. Over the years, 

such problematic practices have 

remained a persistent source of 

consumer harm, saddling consumers 

with recurring payments for products 

and services they never intended to 

purchase nor wanted to continue 

buying. 

The Commission tried to address 

these practices through individual law 

enforcement cases and a patchwork of 

regulations (see discussion at sections 

III–IV). Nevertheless, problems persist, 

as demonstrated in part by the tens of 

thousands of complaints consumers 

submit about these practices to the FTC 

each year. Moreover, the Commission 

and States continue to regularly bring 

cases challenging harmful negative 

option practices, including more than 

35 recent FTC cases.10 These matters 

involved a range of deceptive or unfair 

practices, including inadequate 

disclosures for ‘‘free’’ offers and other 

products or services, enrollment 

without consumer consent, and 

inadequate or overly burdensome 

cancellation and refund procedures.11

As discussed further below, the 

continuing stream of cases; the high 

volume of ongoing complaints; and 

comments on the record all demonstrate 

prevalent unfair and deceptive practices 

and unabated consumer harm. 

III. The FTC’S Existing Regulatory 

Scheme 

A. The FTC’s Current Negative Option 

Rule 

The Commission first promulgated 

the Rule in 1973 pursuant to the FTC 

Act, 15 U.S.C. 41 et seq., finding some 

negative option marketers committed 


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90478 Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 

12The Rule defines ‘‘negative option plan’’ 

narrowly to apply only to prenotification plans. 16 

CFR 425.1(c)(1). In 1998, the Commission clarified 

the Rule’s application to such plans in all media, 

stating that it ‘‘covers all promotional materials that 

contain a means for consumers to subscribe to 

prenotification negative option plans, including 

those that are disseminated through newer 

technologies.’’ 63 FR 44555, 44561 (Aug. 20, 1998). 

13 16 CFR 425.1(a)(1)(i)–(vii). 

14 16 CFR 425.1(a)(2) and (3); id. 425.1(b). 

15Under the FTC Act, ‘‘unfair or deceptive acts 

or practices’’ include acts or practices involving 

foreign commerce that cause or are likely to cause 

reasonably foreseeable injury within the United 

States or involve material conduct occurring within 

the United States. 15 U.S.C. 45(a)(4)(A). Section 

5(n) of the FTC Act provides that ‘‘unfair’’ practices 

are those that cause or are likely to cause 

substantial injury to consumers which is not 

reasonably avoidable by consumers themselves and 

not outweighed by countervailing benefits to 

consumers or to competition. 15 U.S.C. 45(n). 

16See Negative Options: A Report by the Staff of 

the FTC’s Division of Enforcement, 26–29 (Jan. 

2009) (‘‘Staff Report’’), https://www.ftc.gov/reports/ 

negative-options-federal-trade-commissionworkshop-analyzing-negative-option-marketingreport-staff. In discussing the principal Section 5 

requirements related to negative options, the report 

cites the following pre-ROSCA cases, FTC v. JAB 

Ventures, LLC, No. 2:08–cv–04648 (C.D. Cal. 2008); 

FTC v. Complete Weightloss Ctr., No. 1:08–cv– 

00053 (D.N.D. 2008); FTC v. Berkeley Premium 

Nutraceuticals, No. 1:06–cv–00051 (S.D. Ohio 

2006); FTC v. Think All Publ’g, LLC, No. 4:07–cv– 

00011 (E.D. Tex. 2006); FTC v. HispaNexo, Inc., No. 

1:06–cv–424 (E.D. Va. 2006); FTC v. 

Consumerinfo.com, No. 8:05–cv–00801 (C.D. Cal. 

2005); FTC v. Conversion Mktg., No. 8:04–cv–01264 

(C.D. Cal. 2004); United States v. Mantra Films, Inc., 

No. 2:03–cv–9184 (C.D. Cal. 2003); FTC v. Preferred 

Alliance, Inc., No. 1:03–cv–0405 (N.D. Ga. 2003); 

United States v. Prochnow, No. 1:02–cv–917 (N.D. 

Ga. 2002); FTC v. Ultralife Fitness, Inc., No. 2:08– 

cv–07655 (C.D. Cal. 2008); In re America Isuzu 

Motors, FTC Docket No. C–3712 (1996); FTC v. 

Universal Premium Servs., No. 2:06–cv–00849 (C.D. 

Cal. 2006); FTC v. Remote Response Corp., No. 

1:06–cv–20168 (S.D. Fla. 2006). The report also 

cited the FTC’s previously issued guidance, Dot 

Com Disclosures (2002), archived at https://

www.ftc.gov/sites/default/files/attachments/pressreleases/ftc-staff-issues-guidelines-internetadvertising/0005dotcomstaffreport.pdf. See also 

nn.245–252. 

17Courts have found unauthorized billing to be 

unfair under the FTC Act. See, e.g., FTC. v. Neovi, 

Inc., 604 F.3d 1150, 1157–59 (9th Cir. 2010), 

amended by 2010 WL 2365956 (9th Cir. June 15, 

2010); FTC v. Amazon.com, Inc., No. 2:14–cv–1038, 

2016 WL 10654030, at *8 (W.D. Wash. Apr. 26, 

2016); FTC v. Ideal Fin. Sols., Inc., No. 2:13–cv– 

00143, 2015 WL 4032103, at *8 (D. Nev. June 30, 

2015). 

18 15 U.S.C. 8401–8405. 

19ROSCA, 15 U.S.C. 8403(1); see also In re 

MoviePass, Inc., FTC Docket No. C–4751 (2021). 

20 15 U.S.C. 8403. ROSCA incorporates the 

definition of ‘‘negative option feature’’ from the 

TSR, 16 CFR 310.2(w). 

21 15 U.S.C. 8404 (citing section 18 of the FTC 

Act, 15 U.S.C. 57a). 

22 15 U.S.C. 45(m)(1)(A). 

23 15 U.S.C. 53(b). 

24 15 U.S.C. 57b(a)(1), (b). 

unfair and deceptive practices that 

violated section 5 of the Act, 15 U.S.C. 

45. Based on practices at the time, 

however, the Rule only applied to 

prenotification plans for the sale of 

goods, and therefore, does not reach the 

vast majority of modern negative option 

programs.12

Specifically, the Rule required 

prenotification plan sellers to disclose 

their plans’ material terms clearly and 

conspicuously before consumers 

subscribe. To do so, it required sellers 

to disclose seven material terms: (1) 

how subscribers must notify the seller if 

they do not wish to purchase the 

selection; (2) any minimum purchase 

obligations; (3) the subscribers’ right to 

cancel; (4) whether billing charges 

include postage and handling; (5) that 

subscribers have at least ten days to 

reject a selection; (6) that if any 

subscriber is not given ten days to reject 

a selection, the seller will credit the 

return of the selection and postage to 

return the selection, along with 

shipping and handling; and (7) the 

frequency with which announcements 

and forms will be sent.13 In addition, 

sellers had to disclose the specific 

periods during which they would send 

introductory merchandise, give 

consumers a specified period to respond 

to announcements, provide instructions 

for rejecting merchandise in 

announcements, and promptly honor 

written cancellation requests.14

B. Other Current Regulatory 

Requirements 

Several other statutes and regulations 

also address harmful negative option 

practices. First, section 5 of the FTC Act 

has served as the Commission’s primary 

mechanism for addressing deceptive 

negative option claims. Additionally, 

the Restore Online Shoppers’ 

Confidence Act (‘‘ROSCA’’), 15 U.S.C. 

8401–8405, the Telemarketing Sales 

Rule (‘‘TSR’’), 16 CFR part 310, the 

Postal Reorganization Act (i.e., the 

Unordered Merchandise Statute), 39 

U.S.C. 3009, and the Electronic Fund 

Transfer Act (‘‘EFTA’’), 15 U.S.C. 1693– 

1693r, all address various aspects of 

negative option marketing. ROSCA, 

however, is the only law primarily 

designed to do so, but only for online 

transactions. 

1. Section 5 of the FTC Act 

Section 5(a) of the FTC Act, 15 U.S.C. 

45(a), is the core consumer protection 

statute enforced by the Commission. 

That statute broadly prohibits ‘‘unfair or 

deceptive acts or practices’’ but does not 

specifically address negative option 

marketing.15 Therefore, in guidance and 

cases, the FTC has highlighted six basic 

requirements negative option marketing 

must follow to avoid deceptive and 

unfair practices.16 First, marketers must 

disclose the material terms of a negative 

option offer including, at a minimum: 

the existence of the negative option 

offer; the offer’s total cost; the transfer 

of a consumer’s billing information to a 

third party, if applicable; and how to 

cancel the offer. Second, section 5 

requires these disclosures to be clear 

and conspicuous. Third, sellers must 

disclose the material terms of the 

negative option offer before consumers 

agree to the purchase. Fourth, marketers 

must obtain consumers’ consent to such 

offers. Fifth, marketers must not impede 

the effective operation of promised 

cancellation procedures and must honor 

cancellation requests that comply with 

those procedures. Finally, marketers 

cannot make any material 

misrepresentation regarding any portion 

of the transaction. 

In addition to these deception-based 

requirements, the Commission has 

repeatedly stated billing consumers 

without consumers’ express informed 

consent is an unfair act under the FTC 

Act.17

2. ROSCA 

Enacted by Congress in 2010 to 

address, in part, ongoing problems with 

online negative option marketing, 

ROSCA contains general provisions 

related to disclosures, consent, and 

cancellation.18 Specifically, ROSCA 

prohibits charging or attempting to 

charge consumers for goods or services 

sold on the internet through any 

negative option feature unless the 

marketer: (1) clearly and conspicuously 

discloses all material terms of the 

transaction before obtaining the 

consumer’s billing information, 

regardless of whether a material term 

directly relates to the terms of the 

negative option offer; 19 (2) obtains a 

consumer’s express informed consent 

before charging the consumer’s account; 

and (3) provides simple mechanisms for 

the consumer to stop recurring 

charges.20 ROSCA, however, does not 

prescribe specific steps marketers must 

follow to comply with these provisions 

and is limited to online transactions. 

Furthermore, pursuant to the statute, 

a violation of ROSCA is treated as a 

violation of a Commission trade 

regulation rule under section 18 of the 

FTC Act.21 Thus, the Commission may 

seek a variety of remedies for violations 

of ROSCA, including civil penalties 

under section 5(m)(1)(A) of the FTC 

Act; 22 injunctive relief under section 

13(b) of the FTC Act; 23 and consumer 

redress, damages, and other relief under 

section 19 of the FTC Act.24

3. Telemarketing Sales Rule 

The TSR prohibits deceptive 

telemarketing acts or practices, 


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25 16 CFR 310.3(a). 26 15 U.S.C. 1693–1693r. 27 39 U.S.C. 3009. 28EFTA provides that the Commission shall 

enforce its requirements, except to the extent that 

enforcement is specifically committed to some 

other Federal government agency, and that a 

violation of any of its requirements shall be deemed 

a violation of the FTC Act. Accordingly, the 

Commission has authority to seek injunctive relief 

for EFTA violations, just as it can seek injunctive 

relief for other section 5 violations. 

29The Commission has authority to seek the same 

remedies for violations of the Unordered 

Merchandise Statute that it can seek for other 

section 5 violations. The Commission can seek civil 

penalties pursuant to section 5(m)(1)(B) of the FTC 

Act from violators who have actual knowledge that 

the Commission has found mailing unordered 

merchandise unfair. 15 U.S.C. 45(m)(1)(B). 30 Indeed, the prenotification plans covered by 

the Rule represent only a small fraction of negative 

option marketing. In 2017, for instance, the 

Commission estimated that fewer than 100 sellers 

(‘‘clubs’’) were subject to the current Rule’s 

requirements. 82 FR 38907, 38908 (Aug. 16, 2017). 

31See, e.g., In re Dun & Bradstreet, Inc., FTC 

Docket No. C–4761 (2022); FTC v. Nobetes Corp., 

No. 2:18–cv–10068 (C.D. Cal. 2018); FTC v. Dill, No. 

2:16–cv–00023 (D. Me. 2016); FTC v. Shopper Sys., 

LLC, No. 1:12–cv–23919 (S.D. Fla. 2012); FTC v. 

XXL Impressions, LLC, No. 1:17–cv–00067 (D. Me. 

2017); FTC v. Health Rsch. Labs., LLC, No. 2:17–cv– 

00467 (D. Me. 2017); FTC v. Mktg. Architects, No. 

2:18–cv–00050 (D. Me. 2018); see also Individual 

commenter, FTC–2023–0033–0007 (discussing 

deceptive and unfair negative option practices for 

in-person enrollment); Individual commenter, FTC– 

2023–0033–0129 (gym membership in-person 

enrollment); Individual commenter, FTC–2023– 

0033–0299 (same). 

32 74 FR 22720 (May 14, 2009). 

33See Staff Report, n.16. 

34 79 FR 44271 (July 31, 2014). 

35 79 FR 44275. The Commission cited a number 

of its law enforcement actions challenging negative 

option marketing practices, including, for example, 

FTC v. Process Am., Inc., No. 2:14–cv–00386 (C.D. 

Cal. 2014) (processing of unauthorized charges 

relating to negative option marketing); FTC v. 

Willms, No. 2:11–cv–00828 (W.D. Wash. 2011) 

(internet free trials and continuity plans); FTC v. 

Moneymaker, No. 2:11–cv–00461 (D. Nev. 2011) 

(internet trial offers and continuity programs); FTC 

v. Johnson, No. 2:10–cv–02203 (D. Nev. 2010) 

(internet trial offers); and FTC v. John Beck 

Amazing Profits, LLC, No. 2:09–cv–04719 (C.D. Cal. 

2009) (infomercial and telemarketing trial offers and 

continuity programs). 

36 79 FR 44275–76. 

37See sections VI–VII of this SBP. 

38ANPR, 84 FR 52393 (Oct. 2, 2019). 

39Section 18 of the FTC Act authorizes the 

Commission to promulgate rules that define with 

specificity acts or practices in or affecting 

commerce which are unfair or deceptive. 15 U.S.C. 

57a(a)(1)(B). The Commission may issue regulations 

‘‘where it has reason to believe that the unfair or 

deceptive acts or practices which are the subject of 

the proposed rulemaking are prevalent.’’ 15 U.S.C. 

57a(b)(3). The Commission may make such a 

prevalence finding if it has issued cease and desist 

orders regarding such acts or practices, or any other 

available information indicates a widespread 

pattern of unfair or deceptive acts or practices. 

Rules under section 18 ‘‘may include requirements 

prescribed for the purpose of preventing such acts 

or practices.’’ 

40The comments are available online. See 

Regulations.gov, Negative Option Rule (ANPR), 

FTC–2019–0082, https://www.regulations.gov/ 

docket/FTC-2019-0082. 

including those involving negative 

option offers, and certain types of 

payment methods common in deceptive 

negative option marketing. Specifically, 

the TSR requires telemarketers to 

disclose all material terms and 

conditions of the negative option 

feature, including the need for 

affirmative consumer action to avoid the 

charges, the date (or dates) the charges 

will be submitted for payment, and the 

specific steps the customer must take to 

avoid the charges. It also prohibits 

telemarketers from misrepresenting 

such information and contains specific 

requirements related to payment 

authorization.25 The TSR, however, 

only applies to negative option offers 

made over the telephone. 

4. Other Relevant Requirements 

EFTA 26 and the Unordered 

Merchandise Statute 27 also contain 

provisions relevant to unfair and 

deceptive negative option marketing. 

EFTA prohibits sellers from imposing 

recurring charges on a consumer’s debit 

cards or bank accounts without written 

authorization.28 The Unordered 

Merchandise Statute provides that 

mailing unordered merchandise, or a 

bill for such merchandise, constitutes an 

unfair method of competition and an 

unfair trade practice in violation of 

section 5 of the FTC Act.29

IV. Limitations of Existing Regulatory 

Requirements 

The existing patchwork of laws and 

regulations does not provide industry 

and consumers with a consistent legal 

framework across media and offers. For 

instance, as discussed above, the current 

Rule does not cover common practices 

such as continuity plans, automatic 

renewals, and free-to-pay conversions.30

In addition, ROSCA and the TSR do not 

address negative option programs in all 

media. Yet, harmful negative option 

practices that fall outside of ROSCA and 

the TSR’s coverage still occur.31

Additionally, ROSCA lacks specificity 

about cancellation procedures and the 

placement, content, and timing of 

cancellation-related disclosures. 

Instead, the statute requires marketers to 

provide ‘‘simple mechanisms’’ for the 

consumer to stop recurring charges 

without guidance about what is simple. 

While the statute provides more than 

adequate specificity to avoid blatant 

violations, it makes law enforcement 

actions much more difficult for closer 

calls, even when these practices cause 

significant harm. 

V. Negative Option Rulemaking and 

Enforcement Efforts 

The Commission initiated its last 

regulatory review of the Negative 

Option Rule in 2009,32 following a 2007 

FTC workshop and subsequent Staff 

Report.33 The Commission completed 

the review in 2014.34 At the time, the 

Commission found the comments 

supporting the Rule’s expansion ‘‘argue 

convincingly that unfair, deceptive, and 

otherwise problematic negative option 

marketing practices continue to cause 

substantial consumer injury, despite 

determined enforcement efforts by the 

Commission and other law enforcement 

agencies.’’ 35 It also noted practices not 

covered by the Rule (e.g., trial 

conversions and continuity plans) 

accounted for most of the Commission’s 

enforcement activity in this area. 

Nevertheless, the Commission declined 

to expand or modify the Rule because 

the enforcement tools provided by the 

TSR and, especially, ROSCA, which had 

only recently become effective, might 

prove adequate to address the extant 

problems. The Commission emphasized, 

however, if ROSCA and its other 

enforcement tools failed to protect 

consumers, the Commission would 

consider whether and how to amend the 

Rule.36 Since that review, the problems 

with negative options have persisted.37

VI. Rule Review and Request for 

Comment 

A. 2019 Advance Notice of Proposed 

Rulemaking 

Given the persistence of unfair and 

deceptive practices despite significant 

law enforcement attention at both the 

Federal and State level, the Commission 

published its 2019 advance notice of 

proposed rulemaking (‘‘ANPR’’) seeking 

comments on the current Rule, as well 

as possible new measures to reduce 

consumer harm created by deceptive or 

unfair negative option marketing.38

Specifically, the Commission sought 

comment on various alternatives, 

including amendments to existing rules 

to further address disclosures, consumer 

consent, and cancellation. The 

Commission also requested input on 

whether and how it should use its 

authority under section 18 of the FTC 

Act to expand the Negative Option Rule 

to address prevalent unfair or deceptive 

practices involving negative option 

marketing.39 In response, the 

Commission received 17 comments.40

B. 2021 Enforcement Policy Statement 

On November 4, 2021, the 

Commission published an ‘‘Enforcement 

Policy Statement Regarding Negative 

Option Marketing’’ (‘‘2021 Enforcement 

Policy Statement’’ or ‘‘EPS’’) to provide 

guidance regarding its enforcement of 


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41EPS, 86 FR 60822 (Nov. 4, 2021). 

42The Commission recently alleged a negative 

option seller’s failure to disclose it was impeding 

access to its movie subscription service violates 

ROSCA. In re MoviePass, Inc., FTC Docket No. C– 

4751 (2021). 

43The Commission proposed to issue such 

amendments pursuant to section 18 of the FTC Act, 

which authorizes it to promulgate rules specifying 

acts or practices in or affecting commerce which are 

unfair or deceptive. 15 U.S.C. 57a(a)(1)(B). Several 

commenters raised concerns the Commission failed 

to follow section 18’s procedures for two reasons. 

First, commenters argued the Commission’s 

proposed Rule went beyond the scope of the ANPR. 

See, e.g., ESA, FTC–2023–0033–0867; USTelecomThe Broadband Association (‘‘USTelecom’’), FTC– 

2023–0033–0876; Retail Industry Leaders 

Association (‘‘RILA’’), FTC–2023–0033–0883; U.S. 

Chamber of Commerce (‘‘Chamber’’), FTC–2023– 

0033–0885; The Computer & Communications 

Industry Association (‘‘CCIA’’), FTC–2023–0033– 

0984; IAB, FTC–2023–0033–1000; National Retail 

Federation (‘‘NRF’’), FTC–2023–0033–1005). 

Second, they argued the Commission’s proposed 

Rule did not satisfy the specificity and prevalence 

requirements of section 18. The Commission 

addresses these comments in section VII.A. 

44NPRM, 88 FR 24730. 

45See NPRM, 88 FR 24728 (inviting comments on 

free trials); id. at 24729 (requesting comments on 

proposed annual reminder provision); id. at 24730 

(inviting comments on conflicts with existing state 

requirements; id. (seeking comments on proposed 

material changes provision and exempted activities 

or entities); id. (inviting submissions of ‘‘data, 

views, and arguments on the proposed 

amendments’’); id. at 24732–33 (inviting comments 

on the impacts on small businesses, including any 

modifications to reduce costs or burdens for small 

entities); id. at 24734 (inviting comments on the 

Paperwork Reduction Act analysis). See also id. at 

24730 (NPRM section XIII, Request for Comments). 

46See 16 CFR 1.11(e). 

47Unique public comments to the NPRM are 

available online. See regulations.gov, Negative 

Option Rule (NPRM), FTC–2023–0033–0001, 

https://www.regulations.gov/document/FTC-2023- 

0033-0001. The Commission published 1,162 

unique comments. As explained at regulations.gov, 

agencies may withhold duplicate/near duplicate 

examples of a mass-mail campaign. See Gen. Servs. 

Admin., Regulations.gov Frequently Asked 

Questions, Find Dockets, Documents, and 

Comments FAQs, ‘‘How are comments counted and 

posted to Regulations.gov?,’’ https://

www.regulations.gov/faq. The Commission cannot 

quantify the number of individuals or entities 

represented by the comments. The number of 

comments undercounts the number of individuals 

or entities represented by the comments because 

many comments, including those from different 

types of organizations, jointly represent the 

opinions or interests of many. Overall, the 

Commission received 16,612 comments. Of those, 

15,449 were not posted online for various reasons 

(i.e., 14 unrelated, 23 duplicates, and 15,412 that 

appear to be non-unique responses to mass media 

campaigns) and one comment was withdrawn. The 

Commission has considered all timely and 

responsive public comments it received in response 

to its NPRM. 

48The FTC Act provides that ‘‘an interested 

person is entitled to present his position orally or 

by documentary submission (or both).’’ 15 U.S.C. 

57a(c)(2)(A). 

49 16 CFR 1.11(e). 

50The six requesters were (1) International 

Franchise Association; (2) TechFreedom; (3) 

Performance Driven Marketing Institute; (4) 

NCTA—The Internet & Television Association; (5) 

Frontdoor; and (6) Interactive Advertising Bureau. 

All but one—TechFreedom—identified their 

interest in the proceeding either as industry groups 

or private companies. 

51See Notice of Informal Hearing (‘‘Hearing 

Notice’’), 88 FR 85525, 85526 (Dec. 8, 2023). 

52 88 FR 85526–27. 

53The Hearing Notice also allowed interested 

persons to make additional written submissions. 

The following interested parties timely filed 

additional written submissions on December 22, 

2023: (1) BSA—The Software Alliance; (2) PDMI; 

(3) U.S. Chamber of Commerce; (4) IAB; (5) NCTA; 

and two individuals. All filings related to the 

Hearing Notice are available online at 

regulations.gov at https://www.regulations.gov/ 

document/FTC-2023-0073-0001. 

various statutes and FTC regulations.41

The 2021 Enforcement Policy Statement 

enunciated various principles rooted in 

FTC case law and restated previous 

guidance related to the provision of 

information to consumers, consent, and 

cancellations. Among these principles, 

the Statement emphasized ROSCA’s 

requirement that sellers disclose all 

material terms related to the underlying 

product or service that are necessary to 

prevent deception, regardless of 

whether that term relates directly to the 

terms of the negative option offer.42 In 

addition, consistent with ROSCA, 

judicial decisions applying section 5, 

and cases brought by the Commission, 

the 2021 Enforcement Policy Statement 

reiterated sellers should obtain 

consumers’ acceptance of the negative 

option feature separately from any other 

portion of the transaction. Finally, the 

Statement explained sellers should 

provide cancellation mechanisms at 

least as easy to use as the method the 

consumer employed to initiate the 

negative option feature. 

C. 2023 Notice of Proposed Rulemaking 

After reviewing the comments 

received in response to the ANPR and 

issuing the 2021 Enforcement Policy 

Statement, the Commission issued a 

notice of proposed rulemaking 

(‘‘NPRM’’) on April 23, 2023 (88 FR 

24716). In the NPRM, the Commission 

proposed amending the existing Rule to 

prohibit material misrepresentations 

and to require sellers to provide 

important information to consumers, 

obtain consumers’ express informed 

consent, and ensure consumers can 

easily cancel negative option programs 

if they choose. All these proposed 

changes would be applicable to all 

forms of negative option marketing 

across all media (e.g., telephone, 

internet, traditional print media, and inperson transactions).43

The Commission designed the 

proposed amendments to curb deceptive 

or unfair practices occurring in negative 

option marketing. The Commission 

sought public comment on ‘‘all aspects’’ 

of the proposal, ‘‘including the likely 

effectiveness of the proposed Rule in 

helping the Commission combat unfair 

or deceptive practices in negative option 

marketing.’’ 44 The Commission further 

identified specific questions and areas 

where it solicited available data and 

evidence, including data and evidence 

supporting alternatives to the proposed 

regulations.45 The Commission did not 

identify any disputed issues of material 

fact that needed to be resolved at an 

informal hearing.46 The comment 

period closed on June 23, 2023. 

In response, the Commission received 

more than 16,000 comments, and 

published the 1,162 unique comments 

from stakeholders representing a wide 

range of viewpoints.47 Although some 

commenters raised concerns and 

recommended specific modifications or 

additions to the proposed Rule (some of 

which the Commission adopts as 

discussed herein), the majority generally 

supported the Rule. The Commission 

discusses these comments in section VII 

below. 

D. Informal Hearing and Recommended 

Decision 

Section 18 of the Federal Trade 

Commission Act, 15 U.S.C. 57a, and the 

Commission’s Rules of Practice, 16 CFR 

1.11(e),48 provide interested persons the 

opportunity to make an oral statement at 

an informal hearing upon request.49 The 

Commission received six 50 such 

requests. Additionally, although the 

Commission did not designate any 

disputed issues of material fact in the 

NPRM, two interested commenters, IAB 

and NCTA, proposed the Commission 

consider several potential disputed 

issues of material fact.51

On December 8, 2023, the 

Commission published an Initial Notice 

of Informal Hearing (88 FR 85525, 

‘‘Hearing Notice’’). The Hearing Notice 

designated the Honorable Carol Fox 

Foelak, Administrative Law Judge for 

the Securities Exchange Commission, to 

serve as the presiding officer of the 

informal hearing and scheduled the 

informal hearing for January 16, 2024. In 

the Hearing Notice, the Commission 

again did not designate any disputed 

issues of material fact, finding the issues 

raised by IAB and NCTA did not need 

to be resolved at the informal hearing 

through cross-examination.52

On January 16, 2024, Judge Foelak 

commenced the informal hearing, at 

which IAB, NCTA, Performance Driven 

Marketing Institute (‘‘PDMI’’), 

TechFreedom, and the International 

Franchise Association (‘‘IFA’’) appeared 

and made oral submissions subject to 

cross-examination.53 Included in their 

oral and written submissions, IAB and 


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54Subsequently, IFA also asserted there were 

disputed issues of material fact regarding the 

impact to both small businesses and their 

consumers. IFA, FTC–2024–0001–0009. 

55Recommended Decision by Presiding Officer, 

https://www.regulations.gov/comment/FTC-2024- 

0001-0042. 

56 15 U.S.C. 57a and 16 CFR 1.14(a)(1). 

57 15 U.S.C. 57a(b)(3). 

58 15 U.S.C. 57a(b)(3)(A)–(B); see also 

Compassion Over Killing v. FDA, 849 F.3d 849, 855 

(9th Cir. 2017). 

59NPRM, 88 FR 24725. 

60 In the NPRM, the Commission cited a number 

of its law enforcement actions challenging negative 

option marketing practices, including, for example, 

FTC v. Process Am., Inc., No. 1:14–cv–00386 (C.D. 

Cal. 2014) (processing of unauthorized charges 

relating to negative option marketing); FTC v. 

Willms, No. 2:11–cv–00828 (W.D. Wash. 2011) 

(internet free trials and continuity plans); FTC v. 

Moneymaker, No. 2:11–cv–00461 (D. Nev. 2011) 

(internet trial offers and continuity programs); FTC 

v. Johnson, No. 2:10–cv–02203 (D. Nev. 2010) 

(internet trial offers); and FTC v. John Beck 

Amazing Profits, LLC, No. 2:09–cv–04719 (C.D. Cal. 

2009) (infomercial and telemarketing trial offers and 

continuity programs). Further examples of these 

matters include: FTC v. Triangle Media Corp., No. 

3:18–cv–01388 (S.D. Cal. 2018); FTC v. Credit 

Bureau Ctr., LLC, No. 1:17–cv–00194 (N.D. Ill. 

2017); FTC v. JDI Dating, Ltd., No. 1:14–cv–08400 

(N.D. Ill. 2014); FTC v. One Techs., LP, No. 3:14– 

cv–05066 (N.D. Cal. 2014); FTC v. Health Formulas, 

LLC, No. 2:14–cv–01649 (D. Nev. 2014); FTC v. 

NutraClick, LLC, No. 2:16–cv–06819 (C.D. Cal. 

2016); FTC v. XXL Impressions, LLC, No. 1:17–cv– 

00067 (D. Me. 2017); FTC v. AAFE Prods. Corp., No. 

3:17–cv–00575 (S.D. Cal. 2017); FTC v. Pact, Inc., 

No. 2:17–cv–1429 (W.D. Wash. 2017); FTC v. Tarr, 

No. 3:17–cv–02024 (S.D. Cal. 2017); FTC v. 

AdoreMe, Inc., No. 1:17–cv–09083 (S.D.N.Y. 2017); 

FTC v. DOTAuthority.com, Inc., No. 0:16–cv–62186 

(S.D. Fla. 2016); FTC v. BunZai Media Grp., Inc., 

No. 2:15–cv–04527 (C.D. Cal. 2015); and FTC v. 

RevMountain, LLC, No. 2:17–cv–02000 (D. Nev. 

2017); see also FTC v. WealthPress, Inc., No. 3:23– 

cv–00046 (M.D. Fla. 2023); FTC v. Bridge It, Inc., 

No. 1:23–cv–09651 (S.D.N.Y. 2023); FTC v. 

Amazon.com, Inc., No. 2:23–cv–0932 (W.D. Wash. 

2023); FTC v. FloatMe Corp., No. 5:24–cv–00001 

(W.D. Tex. 2024); United States v. Adobe, Inc., No. 

5:24–cv–03630 (N.D. Cal. 2024). 61See, e.g., CFPB v. Transunion, No. 1:22–cv– 

01880 (N.D. Ill. 2022); CFPB v. ACTIVE Network, 

LLC, No. 4:22–cv–00898 (E.D. Tex. 2022); CFPB v. 

Sterling Jewelers, Inc., No. 1:19–cv–00448 (S.D.N.Y. 

2019); In re Equifax Inc., et al., CFPB No. 2017– 

CFPB–0001, 2017 WL 1036710 (Jan. 3, 2017) 

(consent order); CFPB v. Prime Mktg. Holdings, LLC, 

No. 2:16–cv–07111 (C.D. Cal. 2016); In re 

Transunion Interactive, Inc., et al., CFPB No. 2017– 

CFPB–0002, 2017 WL 1036711 (Jan. 3, 2017) 

(consent order); CFPB v. Student Financial Aid 

Servs., Inc., No. 2:15–cv–00821 (E.D. Cal. 2015); 

CFPB v. Affinion Group Holdings, Inc., No. 5:15– 

cv–01005 (D. Conn. 2015); CFPB v. Intersections 

Inc., No. 1:15–cv–835 (E.D. Va. 2015). Notably, the 

CFPB has independent authority to enforce FTC 

rules, and both agencies share some overlapping 

jurisdiction. See 12 U.S.C. 5581(b)(5)(B)(ii). 

62TINA, FTC–2019–0082–0014 (cmt. to ANPR, 

https://www.regulations.gov/comment/FTC-2019- 

0082-0014) and FTC–2023–0033–1139 (cmt. to 

NPRM). 

NCTA renewed their requests to have 

the presiding officer designate disputed 

issues of material fact.54 Following the 

hearing, Judge Foelak designated two 

disputed issues: (1) will the proposed 

rule have an annual effect on the 

national economy of $100 million or 

more?; and (2) what will the 

recordkeeping and disclosure costs 

associated with the proposed rule be? 

Judge Foelak held subsequent hearings 

on January 31, 2024, and February 14, 

2024. She allowed post-hearing briefs 

filed by February 22, and February 28, 

2024, respectively, and issued her 

recommended decision on April 12, 

2024. Based on the evidence, the 

presiding officer found: (1) the proposed 

Rule will have an annual effect on the 

national economy of $100 million or 

more; and (2) there is insufficient 

evidence to make a finding regarding 

the size of the recordkeeping and 

disclosure costs associated with the 

proposed Rule.55

VII. Discussion of Final Rule 

A. Legal Standard for Promulgating the 

Final Rule 

As explained above in section II, the 

Commission promulgates the final Rule, 

16 CFR part 425, pursuant to section 18 

of the FTC Act, also known as 

Magnuson-Moss rulemaking 

(‘‘Magnuson-Moss’’). Under section 18 

and the Commission Rules,56 to 

promulgate a rule the Commission must: 

(1) issue a SBP with statements 

detailing: (a) the prevalence of the acts 

or practices treated by the rule; (b) the 

manner and context in which such acts 

or practices are unfair or deceptive; and 

(c) the economic effect of the rule, 

taking into account the effect on small 

business and consumers; and (2) ‘‘define 

with specificity acts or practices which 

are unfair or deceptive.’’ The 

Commission addresses these 

requirements in part A.1–2. In part A.3, 

the Commission addresses additional 

legal issues, including the ANPR’s scope 

and the ‘‘major questions’’ doctrine. 

1. Statements Required Under Section 

18(d) of the FTC Act 

(a) Statement Regarding Prevalence of 

the Acts and Practices Treated by the 

Rule 

Under the Magnuson-Moss statute, 

the Commission may promulgate rules if 

it ‘‘has reason to believe that the unfair 

or deceptive acts or practices which are 

the subject of the proposed rulemaking 

are prevalent.’’ 57 An act or practice is 

‘‘prevalent’’ if the FTC has previously 

issued cease and desist orders regarding 

the act or practice, or if ‘‘any other 

information available to the 

Commission indicates a widespread 

pattern of unfair or deceptive acts or 

practices.’’ 58 Based on the rulemaking 

record, the Commission has more than 

sufficient reason to believe unfair or 

deceptive acts and practices in the 

negative option marketplace are 

prevalent. These practices include: (1) 

material misrepresentations made while 

marketing using negative option features 

to induce consumers to enter into 

negative option programs; (2) failure to 

provide important information about 

material terms prior to billing 

consumers; (3) lack of informed 

consumer consent; and (4) failure to 

provide consumers with a simple 

cancellation method, including failure 

to honor cancellation requests, refusal to 

provide refunds to consumers who 

unknowingly enrolled in programs, 

denying consumers refunds, forcing 

them to pay to return the unordered 

goods, requiring consumers to cancel 

using a more difficult method than the 

one used to sign up for the program, and 

forcing consumers to contend with 

multiple upsells before allowing 

cancellation.59 These practices cause 

consumer harm by luring consumers 

into purchasing goods and services they 

do not want, or ensnaring consumers 

into unwanted recurring payments that 

are difficult or impossible to cancel. 

The Commission relies on substantial 

evidence in the record showing a 

widespread pattern of unfair or 

deceptive conduct in the negative 

option marketplace. This evidence 

generally falls into three categories: 

State, private, and Federal actions 

(including administrative and Federal 

court FTC law enforcement actions); 

consumer complaints and comments; 

and studies. The Commission discusses 

each in turn below. 

Federal, State, and Private Actions. 

As discussed in the ANPR and NPRM, 

the volume of enforcement efforts in 

recent years seeking to stem illegal 

negative option marketing is significant. 

These matters involve a range of 

deceptive and unfair practices, 

including: failure to adequately disclose 

the existence of negative options, 

including after the expiration of free 

trials; enrollment without consumer 

consent; and inadequate or 

unnecessarily burdensome cancellation 

and refund procedures. The FTC itself 

has brought at least 35 such cases in the 

years since ROSCA was enacted.60 The 

Consumer Financial Protection Bureau 

(‘‘CFPB’’) also has brought many of its 

own negative option cases.61 Truth in 

Advertising, Inc. (‘‘TINA’’),62 a 

consumer advocacy organization, stated 

in 2019 that more than 100 Federal class 

actions involving various negative 

option terms and conditions have been 

filed since 2014. Notwithstanding these 

actions, according to TINA, ‘‘the 

incidence of deceptive negative option 


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63NPRM, 88 FR 24720. 

64TINA, FTC–2023–0033–1139. 

65Several State Attorneys General offered 

comments to the ANPR (FTC–2019–0082–0012 

(State Attorneys General cmt. to ANPR, https://

www.regulations.gov/comment/FTC-2019-0082- 

0012)), and additionally 26 Attorneys General for 

the States of Alabama, Arizona, California, 

Colorado, Connecticut, Delaware, District of 

Columbia, Hawaii, Illinois, Maine, Maryland, 

Massachusetts, Michigan, Minnesota, Nebraska, 

Nevada, New Jersey, New York, North Carolina, 

North Dakota, Oklahoma, Oregon, Pennsylvania, 

Vermont, Washington, and Wisconsin (‘‘State AGs’’) 

filed comments in response to the NPRM. See State 

AGs, FTC–2023–0033–0886 (cmt. to NPRM). 

66NPRM, 88 FR 24720; State Attorneys General 

(ANPR), FTC–2019–0082–0012. They further 

explained the nature of the underlying products 

often fails to alert consumers of their enrollment in 

a negative option program. For instance, many 

offers involve credit monitoring or anti-virus 

computer programs costing less than $20 a month 

and have no tangible presence for consumers. The 

State AGs explained consumers are often unaware 

of having ordered these products, never use them, 

and never notice them on their bills. The State AGs 

further explained these transactions often pull 

consumers into a stream of recurring payments by 

obtaining credit card information to ostensibly pay 

for a small shipping charge. Consequently, they 

commented many consumers have been billed for 

such services for years before discovering the 

unauthorized charges. Id. 

67NPRM, 88 FR 24721. 

68State Attorneys General (ANPR), FTC–2019– 

0082–0012. 

69 Id. 

70State AGs, FTC–2023–0033–0886. 

71See, e.g., Joint comment from Professor Kaitlin 

Caruso (U. of Maine School of Law), Professor Jeff 

Sovern (St. John’s U. School of Law), Professor Dee 

Pridgen (U. of Wyoming College of Law), Professor 

Chrystin Ondersma (Rutgers Law School), Professor 

Vijay Raghavan (Brooklyn Law School), Professor 

David Vladeck (Georgetown U. Law Center), 

Professor Edward Janger (Brooklyn Law School), 

and Professor Susan Block-Lieb (Fordham U. 

School of Law) (collectively, ‘‘Law Professors’’), 

FTC–2023–0033–0861. 

72See, e.g., PDMI, FTC–2023–0033–0864 (stating 

over 27 states regulate negative option marketing); 

N/MA, FTC–2023–0033–0873 (stating 35 states and 

the District of Columbia now have automatic 

renewal laws, and at least 20 address all forms of 

automatic renewals); Service Contract Industry 

Council (‘‘SCIC’’), FTC–2023–0033–0879 (noting 

about half of U.S. states enacted auto-renewal laws); 

NRF, FTC–2023–0033–1005 (stating at least half of 

all states have statutes governing free-trial, negativeoption, and/or automatic-renewal programs); see 

also Law Professors, FTC–2323–0033–0861 (stating 

the ‘‘number of states that have recently adopted 

specific laws targeting negative option marketing, 

on top of their general prohibitions on unfair and 

deceptive practices and ability to enforce ROSCA, 

is particularly noteworthy.’’); IHRSA, The Global 

Health & Fitness Association (‘‘IHRSA’’), FTC– 

2023–0033–0863 (noting many states have laws on 

negative options). But see The Center for Consumer 

Law and Economic Justice at UC Berkeley School 

of Law (‘‘Berkeley Consumer Law Center’’), FTC– 

2023–0033–0855 (stating that ‘‘fewer than half the 

states have a law specifically addressing negative 

option marketing’’). 

73Law Professors, FTC–2023–0033–0861. This 

group also points out that private industry, too, has 

felt the need for more action in this area, noting that 

VISA and Mastercard have their own requirements 

for businesses that bill using a negative option 

model. 

74See, e.g., United States v. Adobe, Inc., No. 

5:24–cv–03630 (N.D. Cal. 2024) (ECF No. 40, Amd. 

Compl.); FTC v. Amazon.com, Inc., No. 2:23–cv– 

0932 (W.D. Wash. 2023) (ECF No. 67, Amd. 

Compl.). 

75TINA, FTC–2023–0033–1139. 

76The term ‘‘dark patterns’’ has been used to 

describe design practices that trick or manipulate 

users into making choices they would not otherwise 

have made and that may cause harm See Bringing 

Dark Patterns to Light, FTC Staff Report (Sept. 

2022), https://www.ftc.gov/system/files/ftc_gov/pdf/ 

P214800%20Dark%20Patterns%20Report%209.14.

2022%20-%20FINAL.pdf. 

77Berkeley Consumer Law Center, FTC–2023– 

0033–0855. 

78Law Professors, FTC–2023–0033–0861. 

79NPRM, 88 FR 24720–21. 

offers continues to rise.’’ 63 TINA also 

reports that deceptive negative options 

‘‘have only continued to grow’’ since its 

2019 comment.64

Several state Attorneys General 65 also 

referenced dozens of enforcement 

actions taken in recent years to address 

the proliferation of deceptive negative 

option practices they regularly 

encounter, including the ‘‘lack of 

informed consumer consent, lack of 

clear and conspicuous disclosures, 

failure to honor cancellation requests 

and/or refusal to provide refunds to 

consumers who unknowingly enrolled 

in plans.’’ 66 These agencies explained 

their actions ‘‘demonstrate that 

problems persist in this area and that 

additional regulatory action is 

needed.’’ 67 For example, over the last 

decade, New York alone has reached 23 

negative option settlements involving a 

variety of products and services such as 

membership programs, credit 

monitoring, dietary supplements, and 

apparel.68 They also described several 

multi- and individual state law 

enforcement actions involving negative 

option offers for products and services 

such as satellite radio, social networking 

services, language learning programs, 

security monitoring, and dietary 

supplements. They further recounted 

numerous, illustrative complaints from 

consumers who ordered what they 

thought were free, no-obligation 

samples but then found themselves 

enrolled in costly continuity 

programs.69

Additionally, the State AGs outlined 

several ongoing investigations into 

deceptive or unfair negative option 

programs since 2019. These 

investigations include allegations of 

misrepresenting offers as free when they 

were not; and failure to clearly and 

conspicuously disclose negative option 

features.70

Additionally, consumer advocacy 

organizations and others explained that 

the widespread prevalence of deceptive 

acts and practices underscores the 

‘‘ongoing need for [S]tate engagement to 

limit negative option abuses.’’ 71 Several 

commenters observed that more than 

half of States specifically regulate some 

aspect of negative option marketing.72 A 

group of law professors explain this 

‘‘ongoing engagement just shows that 

unscrupulous negative-option business 

models remain such a problem that 

[S]tates increasingly find themselves 

needing to step in.’’ 73

Consumer Complaints and 

Comments. The FTC receives tens of 

thousands of complaints about negative 

options each year through its Sentinel 

complaint database, and marketers 

receive many more as demonstrated by 

evidence in FTC cases.74 Additionally, 

TINA explained that negative options 

are one of its top complaint categories. 

These complaints usually involve 

consumers who unwittingly enroll in 

programs and then find it difficult or 

impossible to cancel.75

Moreover, hundreds of consumer 

comments detailed specific practices 

(discussed more thoroughly in 

connection with the section-by-section 

analysis below) demonstrating the 

prevalence of unfair or deceptive 

negative option practices. Likewise, 

comments from public interest and 

consumer advocacy groups further 

describe existing deceptive or unfair 

practices prevalent in the negative 

option marketplace. For example, 

Berkeley Consumer Law Center 

explained businesses regularly use dark 

patterns 76 to facilitate enrollment in 

subscription-based products and inhibit 

cancellation, and provided numerous 

examples of these activities.77 A group 

of law professors referenced the 

burgeoning industry offering to help 

consumers identify and cancel their 

unwanted subscriptions. As they 

explained: ‘‘One might expect that, if 

consumers experienced the marketplace 

as one in which they are adequately 

informed of recurring payments and 

readily able to cancel them, there would 

not be an emerging industry to help 

them do just that.’’ 78

Members of Congress also detailed 

ongoing problems in this area. Citing the 

increase in consumer complaints and 

consumer harm in recent years, 

Representative Takano stated, 

‘‘deceptive online marketing and 

unclear recurring payment plans are 

leaving too many consumers on the 

hook for products they may not want or 

even know they purchased.’’ 79

Representatives Schiff and Norton noted 

their constituents’ desire for greater 

protections in the negative option 

marketplace, stating the ‘‘proposed 

updates will help put the consumers 


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80Schiff and Norton, FTC–2023–0033–0868. 

81NPRM, 88 FR 24725. 

82Steve Baker, Subscription Traps and Deceptive 

Free Trials Scam Millions with Misleading Ads and 

Fake Celebrity Endorsements, Better Business 

Bureau (Dec. 2018), https://www.bbb.org/article/ 

investigations/18929-subscription-traps-anddeceptive-free-trials-scammillions-with-misleadingads-and-fake-celebrity-endorsements. 

83 Id.; see also Better Business Bureau, BBB 

Investigation Update: Free Trial Offer Scams (Apr. 

2020), https://www.bbb.org/article/news-releases/ 

22040-bbb-update-free-trial-offerscams (reporting 

the total has risen to nearly $1.4 billion since the 

2018 BBB study); id. (observing that while 

celebrities, credit card companies and government 

agencies have increased their efforts to fight 

deceptive free trial offer scams, victims continue to 

lose millions of dollars to fraudsters after the 

release of a December 2018 BBB study about the 

shady practices). 

84The six public interest and consumer advocacy 

groups are: Consumer Action, Consumer Federation 

of America, Demand Progress Education Fund, 

National Association of Consumer Advocates, 

Nation Consumer Law Center (on behalf of its low 

income clients,) and National Consumers League 

(‘‘NCL’’) (collectively, the ‘‘Public Interest 

Groups’’). 

85Steve Baker, Subscription Traps and Deceptive 

Free Trials Scam Millions with Misleading Ads and 

Fake Celebrity Endorsements, Better Business 

Bureau (Dec. 2018). 

86NPRM, 88 FR 24720 (citing Rebecca Lake, 

‘‘Report: Hidden Fees Are #1 Consumer 

Complaint,’’ mybanktracker.com (updated Oct. 16, 

2018), https://www.mybanktracker.com/moneytips/money/hidden-fees-consumercomplaint253387.) 

87NPRM, 88 FR 24721. 

88Bankrate, ‘‘Despite safety concerns, 64% of 

U.S. debit or credit cardholders save their 

information online’’ (Oct. 24, 2019), at https://

www.bankrate.com/pdfs/pr/20191024-onlineshopping-survey.pdf (as cited by Civil Society 

Organizations, FTC–2023–0033–0870). 

89NPRM, 88 FR 24720. 

90Public Interest Groups, FTC–2023–0033–0880 

(citing ‘‘Subscription Service Statistics and Costs,’’ 

C+R Research Blog (May 18, 2022)). 

91Public Interest Groups, FTC–2023–0033–0880 

(citing Chase, ‘‘Survey from Chase Reveals That 

Two-Thirds of Consumers Have Forgotten About At 

Least One Recurring Payment In The Last Year’’ 

(Apr. 1, 2021), https://media.chase.com/news/ 

survey-from-chase-reveals). 

92State AGs, FTC–2023–0033–00866 (citing 

Sarah Brady and Korrena Bailie, ‘‘5 Tools To Help 

You Cancel Unwanted Subscriptions,’’ Forbes (July 

13, 2022), https://www.forbes.com/advisor/ 

personal-finance/manage-subscriptions). See also 

Einav, Liran, et al., ‘‘Selling Subscriptions’’ (Dec. 1, 

2023), https://nmahoney.people.stanford.edu/sites/ 

g/files/sbiybj23976/files/media/file/mahoney_

subscriptions.pdf. 

93TINA, FTC–2023–0033–1139. 

94 Id. 

95See n.91. 

96NCTA, FTC–2023–0033–0858; see also SCIC, 

FTC–2023–0033–0879. 

97BSA, FTC–2023–0033–1015; see also 

Anonymous commenter, FTC–2023–0033–1007; 

NCTA, FTC–2023–0033–0858. 

98See sections VII.A.1.a–b and section II.A.1.b of 

this SBP. 

99See generally 15 U.S.C. 57a. 

back in control of their purchases and 

subscriptions.’’ 80

Studies. Finally, ‘‘studies cited by 

commenters confirm a pattern of 

consumer ensnarement in unwanted 

recurring payments.’’ 81 A Better 

Business Bureau study of FTC data, 

titled ‘‘Subscription Traps and 

Deceptive Free Trials Scam Millions 

with Misleading Ads and Fake Celebrity 

Endorsements,’’ demonstrated 

complaints about free trials doubled 

between 2015 and 2017, with 

complaints during the period reaching 

nearly 37,000.82 The BBB study shows 

consumer losses in FTC ‘‘free trial offer’’ 

cases exceeded $1.3 billion (over the ten 

years covered by the study).83 A group 

of consumer and public interest 

advocacy organizations, including the 

National Consumers League 84 stated 

that, according to the BBB, the average 

consumer loss for a free trial is $186.85

Referring to another survey conducted 

in 2016, TINA noted unwanted fees 

associated with trial offers and 

automatically renewing subscriptions 

ranked as ‘‘the biggest financial 

complaint of consumers.’’ 86 Similarly, 

TINA noted the FBI’s internet Crime 

Complaint Center recorded a rise in 

complaints about free trial offers, 

growing from 1,738 in 2015 to 2,486 in 

2017.87 A 2019 Bankrate.com survey 

cited by NCL found that 59% of 

consumers have been signed up ‘‘against 

their will’’ for ‘‘free trials’’ that 

automatically converted into a recurring 

payment.88

NCL and others also cited a 2017 

national telephone survey 

commissioned by CreditCards.com 

finding 35% of U.S. consumers have 

enrolled in at least one automatically 

renewing contract without realizing it.89

In response to the NPRM, the Public 

Interest Groups cited more recent 

studies confirming the continued 

prevalence of harms from deceptive and 

unfair negative option practices. For 

instance, consumer groups referenced a 

2022 study, which concluded ‘‘on 

average, consumers pay two-and-a-half 

times what they originally estimated on 

monthly subscriptions, likely due to the 

lack of adequate notice from sellers.’’ 90

They also noted burdensome 

cancellation procedures remain 

rampant. ‘‘One survey found that more 

than half of respondents reported it took 

an average of three months to cancel 

unwanted recurring payments.’’ 91 That 

same study reported 71% of individuals 

lost more than $50 a month in 

unwanted subscriptions. Another study 

concluded consumers underestimate 

how much they pay to maintain their 

subscriptions by an average of $133/ 

month (or $1,596 per year), and 42% of 

the consumers had forgotten about a 

subscription for which they continued 

to pay.92

Finally, TINA also noted a consumer 

survey by the Washington Attorney 

General’s office finding ‘‘59% of 

Washingtonians (3.5 million residents) 

may have been unintentionally enrolled 

in a subscription plan or service when 

they thought they were making a onetime purchase.’’ 93 TINA contended this 

is ‘‘consistent with’’ the 2022 Bankrate 

survey finding more than half of U.S. 

adults experience unwanted charges 

from a subscription or membership.94

These findings are further supported by 

a Chase Bank study in 2021 finding 

nearly three-quarters of Americans 

waste more than $50 a month on 

unwanted subscription fees.95

Despite the robust evidence that 

unfair or deceptive practices are 

exceedingly prevalent, several trade 

organizations challenged the 

Commission’s proposed prevalence 

determination. However, their 

arguments, as discussed below, are not 

persuasive. 

First, they argued the Commission 

must show prevalence in a specific 

industry in order to regulate negative 

option practices in that industry, but the 

Commission failed to do so. For 

instance, NCTA asserted there is no 

evidence of widespread deceptive 

negative option practices in the 

broadband, cable, or voice industries 

warranting regulation.96 Other 

commenters argued the Commission 

must identify the prevalence of a 

specific deceptive or unfair act to 

warrant regulating that specific act or 

practice under Section 18. For instance, 

IAB, NCTA, TechNet, and TechFreedom 

argued the Commission failed to show 

prevalence of misrepresentations about 

the underlying product or service in 

connection with negative option 

contracts. Similarly, three commenters 

argued the Commission should limit the 

scope of the Rule to business-toconsumer transactions and exclude 

business-to-business (‘‘B2B’’) 

transactions, in part, because the 

Commission failed to show ‘‘the 

prevalence of harms created by 

automatically-renewing subscriptions 

entered into in the business-to-business 

context.’’ 97

As demonstrated above, however, 

there is ample evidence in the record 

demonstrating the prevalence of the 

specific unfair and deceptive practices 

across numerous sectors of the 

economy, which the Commission now 

addresses in an industry-neutral 

fashion.98 Moreover, nothing in Section 

18 requires the Commission to find 

prevalence regarding a specific industry 

or group.99 The Commission need only 


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100Pennsylvania Funeral Dirs. Ass’n, Inc. v. FTC, 

41 F.3d 81, 87–88 (3d Cir. 1994) (holding the FTC 

did not need ‘‘substantial, rigorous, quantitative 

studies’’ or to show the practice occurs in a certain 

percentage of transactions through the country to 

find prevalence). ‘‘Further, even where there is a 

limited record as to the prevalence of a practice on 

a nationwide basis or where the data reviewed only 

relates to a few states, the practice can be found to 

be prevalent enough to warrant a regulation.’’ Id. at 

87. 

101NCTA, FTC–2023–0073–0008. 

102CTA, FTC–2023–0033–0997. CTA reports that 

a 2022 study found the global subscription ecommerce market is expected to reach $904.2 

billion by 2026, and between 2021 and 2022, 

existing subscription brands grew their customer 

bases by 31 percent. 

103According to a 2018 McKinsey & Company 

study, the subscription e-commerce market 

increased more than 100% over a five-year period 

prior to the study’s publication. Tony Chen, Ken 

Fenyo, Sylvia Yang, and Jessica Zhang, ‘‘Thinking 

Inside the Subscription Box: New Research on ECommerce Consumers,’’ McKinsey & Company 

(February 2018) (as cited by, e.g., TechNet, FTC– 

2023–0033–0869 and Individual commenter, FTC– 

2023–0033–0800). PDMI also observed that negative 

options are offered in a wide array of product and 

services from major brands including media 

services, meal preparation kits, shaving and beauty 

products, beer and wine, contacts and ordinary 

household consumables. FTC–2023–0033–0864. 

Digital Content Next (‘‘DCN’’), FTC–2023–0033– 

0983, reports the United States had more than one 

billion paid subscriptions in Q1 2023 across the 

digital media landscape, indicating almost all 

online U.S. households subscribe to one or more 

digital media subscription services. See also, e.g., 

Individual commenter, FTC–2023–0033–0137 

(detailing difficulty cancelling recurring 

subscriptions for newspaper, mobile, and other 

businesses); Individual commenter, FTC–2023– 

0033–0217 (reported spending hours on the phone 

and online to cancel mobile account); Individual 

commenter, FTC–2023–0033–0465 (reported 

difficulty cancelling rewards program subscription); 

Individual commenter, FTC–2023–0033–0674 

(complaint reporting difficulty canceling mobile 

device protection subscription); Individual 

commenter, FTC–2023–0033–0965 (trying to cancel 

mobile phone service because they bill for different 

amount every month); Individual commenter, FTC– 

2023–0033–0003 (difficulty cancelling ‘‘home 

warranty’’ subscription); Individual commenter, 

FTC–2023–0033–0004 (full cost and refund policy 

for gym contract not clearly disclosed); Individual 

commenter, FTC–2023–0033–0006 (‘‘2 attempts and 

far too much time’’ to cancel radio subscription); 

Individual commenter, FTC–2023–0033–0008 

(discussing how ‘‘subscription services in particular 

pervade the market. Even long-standing ‘buy-itonce’ products such as certain software suits have 

moved to subscription models’’); Anonymous 

commenter, FTC–2023–0033–0013 (difficulty 

canceling home security monitoring contract, 

including hearing unwanted upsells); Anonymous 

commenter, FTC–2023–0033–0023 (webhosting 

service); Anonymous commenter, FTC–2023–0033– 

0024 (cable service); Individual commenter, FTC– 

2023–0033–0039 (language learning app); 

Anonymous commenter, FTC–2023–0033–0046 

(software); Individual commenter, FTC–2023–0033– 

0049 (cannot cancel streaming service); Individual 

commenter, FTC–2023–0033–0050 (virus protection 

software and charity); Individual commenter, FTC– 

2023–0033–0052 (e-news service subscription); 

Individual commenter, FTC–2023–0033–0057 

(magazine subscription service); Individual 

commenter, FTC–2023–00330061 (newspaper); 

Individual commenter, FTC–2023–0033–0063 (big 

box retailer membership); Individual commenter, 

FTC–2023–0033–0064 (cosmetics); Anonymous 

commenter, FTC–2023–0033–0066 (home warranty 

service); Individual commenter, FTC–2023–0033– 

0071 (lawncare service). 

104See Prof. Chris Jay Hoofnagle, UC Berkeley 

(‘‘Hoofnagle’’), FTC–2023–0033–1137 (discussing 

the subscription economy). See also nn.245–252, 

collecting cases showing deceptive and unfair 

negative option practices occur across a wide range 

of industries and involve a variety of claims. 

105State AGs, FTC–2023–0033–0886 (consumer 

paid for shipping on ‘‘free’’ gift only to have it 

converted to a paid item because she retained the 

item); id. (Money Map Press), FTC v. Triangle 

Media Corp., No. 3:18–cv–01388 (S.D. Cal. 2018) 

(consumers who clicked on ads for risk free trials, 

paid for shipping and handling fees unwittingly 

enrolled in negative option programs). 

106See nn.245–252 (collecting cases). 

107See State Attorneys General (ANPR), FTC– 

2019–0082–0012 and State AGs, FTC–2023–0033– 

0886; TINA, FTC–2019–0082–0014 and FTC–2023– 

0033–1139. 108See, e.g., id.; see also FTC v. Pact, Inc., No. 

2:17–cv–1429 (W.D. Wash. 2017); United States v. 

MyLife.com, Inc., No. 2:20–cv–6692 (C.D. Cal. 

2020); FTC v. NutraClick, LLC, No. 2:20–cv–08612 

(C.D. Cal. 2020); In re Dun & Bradstreet, Inc., FTC 

Docket No. C–4761 (2022). See generally Staff 

Report, n.16. 

109See, e.g., State Attorneys General (ANPR), 

FTC–2019–0082–0012 and State AGs, FTC–2023– 

0033–0886; FTC v. FloatMe Corp., No. 5:24–cv– 

00001 (W.D. Tex. 2024); United States v. Cerebral, 

Inc., No. 1:24–cv–21376 (S.D. Fla. 2024); FTC v. 

Bridge It, Inc., No. 1:23–cv–09651 (S.D.N.Y. 2023); 

FTC v. Benefytt Techs., Inc., No. 8:22–cv–01794 

(M.D. Fla. 2022); FTC v. First Am. Payment Sys., 

No. 4:22–cv–00654 (E.D. Tex. 2022); FTC v. 

NutraClick, LLC, No. 2:20–cv–08612 (C.D. Cal. 

2020); FTC v. F9 Advert., LLC, No. 3:19–cv–01174 

(D.P.R. 2019); FTC v. Age of Learning, Inc., No. 

2:20–cv–07996 (C.D. Cal. 2020); FTC v. NutraClick, 

LLC, No. 2:16–cv–06819 (C.D. Cal. 2016); FTC v. AH 

Media Grp., LLC, No. 3:19–cv–04022 (N.D. Cal. 

2019); In re Urthbox, Inc., FTC Docket No. C–4676 

(2019); FTC v. Health Rsch. Labs., LLC, No. 2:17– 

cv–00467 (D. Me. 2017); FTC v HispaNexo, Inc., No. 

1:06–cv–424 (E.D. Va. 2006). 

110See section VII.B.6. 

111Section VII.A.1.a. 

find ‘‘some basis or evidence’’ 

demonstrating the practice the 

Commission seeks to regulate ‘‘does 

indeed occur.’’ 100 Such evidence exists 

here in abundance. As NCTA itself 

pointed out, individual consumers 

complained of deceptive and unfair 

practices in its members’ industries.101

Further, ‘‘consumer subscription models 

are rapidly growing in popularity,’’ 102

and there is evidence of the 

proliferation of negative option features 

in virtually every industry.103 The 

harms outlined here resulted from the 

negative option transaction itself, and 

many businesses, regardless of industry, 

are incentivized to continue to leverage 

negative options to the possible 

detriment of consumers.104 The 

Commission also declines to limit the 

scope of the final Rule by excluding 

business-to-business transactions. As 

explained in Section VII.B.1, the 

Commission has a long history of 

protecting businesses, particularly small 

business, in their role as consumers; the 

practices and harms described here 

impact these consumers, as well. 

(b) The Manner and Context in Which 

the Acts or Practices Are Unfair or 

Deceptive 

Pursuant to Section 18 and the 

Commission’s Rules, the Commission 

must also state the manner and context 

in which the prevalent acts or practices 

are unfair or deceptive. The record 

demonstrates consumers are often lured 

into enrolling in negative option 

programs through seller 

misrepresentations about material 

facts—for instance, when a seller offers 

a product for ‘‘free’’ when it is not.105

Additionally, sellers misrepresent other 

aspects of the deal, such as product 

features, processing or shipping fees, 

billing information use, deadlines, 

consumer authorization, refunds, 

cancellations, among other facts.106

Sellers also often fail to disclose 

important information about the offer 

prior to billing the consumer. As 

detailed in the comments from, inter 

alia, State AGs and TINA, sellers fail to 

disclose in a clear and conspicuous 

manner the existence of the negative 

option feature, refund and cancellation 

deadlines, or other material terms of the 

agreement, resulting in consumers 

purchasing goods or services they do 

not want.107 All of these unfair or 

deceptive acts are further supported in 

dozens of FTC, State AG, and class 

action cases.108

The record also demonstrates sellers 

fail to obtain consumers’ express 

informed consent to the negative option 

feature before charging them. For 

instance, as detailed in representative 

consumer complaints from State AGs 

and several FTC cases, consumers are 

often unwittingly enrolled into 

recurring subscriptions with promises of 

no- or low-cost or discounted rates (not 

knowing that agreeing will result in 

subscription to a costly membership), 

with consumers not realizing the 

deceptive and unfair enrollment until 

they see unexpected charges, often after 

several billing cycles.109

Finally, substantial record evidence 

shows sellers often fail to provide a 

simple cancellation method. If 

consumers cannot easily leave a 

negative option program when they 

wish, the negative option feature is 

merely a means of charging consumers 

for goods or services they no longer 

want. Commission cases, the Sentinel 

complaint database, and State Attorneys 

General’s complaints all show sellers 

often use difficult and cumbersome 

cancellation mechanisms to prevent or 

curtail cancellations.110 This fact is 

further corroborated by studies 

discussed above.111


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112 IAB, FTC–2023–0033–1000; Coalition 

Comments from CCIA, Direct Selling Association, 

Information Technology Industry Council, IAB, 

Software & Information Industry Association, and 

Chamber (‘‘Coalition’’), FTC–2023–0033–0884; 

PDMI, FTC–2023–033–0864; TechNet, FTC–2023– 

0033–0869; TechFreedom, FTC–2023–0033–0872; 

ACT-The App Association (‘‘ACT App 

Association’’), FTC–2023–0033–0874; USTelecom, 

FTC–2023–0033–0876. 

113 IAB, FTC–2023–0033–1000. 

114See Section I; Section VII.A, defining the acts 

and practices covered in §§ 425.3 through 425.6 as 

unfair or deceptive and a violation of the Rule. As 

acknowledged by USTelecom, the ‘‘contours of the 

‘specificity’ requirement have not been precisely 

defined.’’ FTC–2023–0033–0876. 

115See SBP Section VII.B.3 discussing § 425.3. 

116 Id. As explained in the Katharine Gibbs 

School dissent, ‘‘Congress required specific 

definitions of such practices so that a rule would 

‘reasonably and fairly inform those within its ambit 

of the obligation to be met and the activity to be 

avoided.’ ’’ 612 F.2d 658, 672 (quoting H.R. Rep. 

No.93–1107, 93d Cong., 2d Sess. 46 (1974), 

reprinted in (1974) U.S.C.C.A.N., pp. 7702, 7727). 

117As discussed in Section VII.B.6, the 

Commission removes the proposed save provision 

from the final Rule. 

118As discussed in Section VII.B.7, the 

Commission removes the proposed annual 

reminder provision from the final Rule. 

119E.g., IAB, FTC–2023–0033–1000. 

120 15 U.S.C. 57a(b)(2)(A). ‘‘The Advance Notice 

[of Proposed Rulemaking] is a formal invitation to 

participate in shaping the proposed rule and starts 

the notice-and-comment process in motion.’’ Office 

of the Federal Register, ‘‘A Guide to the Rulemaking 

Process,’’ https://www.federalregister.gov/uploads/ 

2011/01/the_rulemaking_process.pdf. 

121ANPR, 84 FR 52393; see also id. 52396–8 

(Request for Comments); Section VII.B.3.b.1 

(discussing ANPR in context of § 425.3). 

122PDMI, FTC–2023–0033–0864; ACT App 

Association, FTC–2023–0033–0874; Coalition, 

FTC–2023–0033–0884; Chamber, FTC–2023–0033– 

0885. 

(c) Statement as to the Economic Effect 

of the Rule 

Finally, pursuant to section 18 and 

the Commission’s Rules, the SBP must 

include a statement regarding the 

economic effect of the Rule. As part of 

these rulemaking proceedings, the 

Commission solicited and received 

comments on the economic impact of 

the proposed Rule. In issuing the final 

Rule, the Commission has carefully 

considered the comments and other 

information received as well as the costs 

and benefits of each provision, as 

discussed in more detail in section X, 

Final Regulatory Analysis. That analysis 

demonstrates the benefits of the Rule far 

exceed the costs. Benefits were 

evaluated on a per-cancellation basis; 

that is, the analysis assumes the primary 

consumer benefit of the Rule will come 

in the form of faster cancellations. Costs 

were evaluated primarily to reflect 

resources spent by businesses to review 

and come into compliance with the 

Rule. The overall net benefit of the Rule 

is estimated to exceed $5.3B (and could 

be as much as $49.2B) over the first 10 

years (in 2023 dollars). 

2. Magnuson-Moss Specificity 

Requirement 

Pursuant to Magnuson-Moss, the 

Commission must also define with 

specificity acts or practices which are 

unfair or deceptive and either prohibit 

those activities or establish rules to 

prevent them. The Commission has 

done just that, despite some 

commenters’ arguments to the contrary. 

Specifically, IAB and others 112 argue 

the provision prohibiting material 

misrepresentations fails to define claims 

that fall within its scope, and therefore, 

‘‘fails to identify covered acts with the 

requisite level of specificity.’’ 113

First, section 18 does not require the 

Commission to define claims with 

specificity, only acts or practices. The 

practice of misrepresenting the material 

facts of a transaction, for instance, is a 

deceptive practice, but could vary 

depending on the transaction’s terms. 

Requiring the Commission to identify 

particular claims would make its rules 

no better than a leaky sieve, unable to 

effectively address consumer harm. 

Second, the NPRM and the final Rule 

do define with the requisite specificity 

the unfair or deceptive negative option 

acts and practices covered by the 

Rule.114 While those critical of the 

proposed Rule cite to Katharine Gibbs 

School v. FTC, 612 F.2d 658 (2d Cir. 

1979), this case is inapposite. In 

Katharine Gibbs School, the Second 

Circuit held the Commission failed to 

connect elements of its trade regulation 

rule to specifically defined unfair or 

deceptive acts or practices. The opinion 

held the Commission may not merely 

set requirements and then define failure 

to meet those requirements as unfair or 

deceptive acts or practices. The 

Commission must instead identify some 

underlying deceptive or unfair conduct 

and connect the rule requirements to 

that conduct. 

In contrast here, the Commission 

specifically identified misrepresentation 

of material facts as a deceptive practice, 

and defined the term ‘‘material’’ with 

the same meaning it has under Section 

5 of the FTC Act.115 Moreover, the 

misrepresentations provision goes 

further, providing categories of 

potentially material facts to assist the 

marketplace in understanding the 

provision and supporting those 

examples with cases.116 Thus, the final 

Rule’s prohibition against material 

misrepresentations is not only 

connected to underlying deceptive or 

unfair conduct, but in fact prohibits that 

very conduct. 

3. Other Legal Issues 

Several commenters raised additional 

challenges to the Commission’s ability 

to promulgate the Rule. These 

challenges fall into two categories. First, 

some commenters argued the 

Commission failed to give adequate 

notice of the scope of the proposed 

amendments to the Rule in the ANPR in 

accordance with Section 57a(b)(2)(A) of 

the FTC Act. Second, four commenters 

argued the Commission exceeded its 

grant of Congressional authority under 

the ‘‘major questions’’ doctrine. The 

Commission addresses each argument 

below. 

(a) ANPR 

Several commenters asserted the 

ANPR, issued in 2019, failed to provide 

adequate notice of the acts and practices 

to be covered by the proposed Rule. 

Specifically, ESA, USTelecom, RILA, a 

coalition of trade associations, Chamber, 

CCIA, IAB, and NRF argued the ANPR 

failed to provide notice the proposed 

Rule would cover misrepresentations of 

all material facts; would require express 

informed consent to opt-in to receive a 

save; 117 and would require an annual 

reminder.118 Thus, according to these 

commenters, including these provisions 

in the final Rule would violate Section 

18(b)(2)(A). They further argued the lack 

of these topics’ inclusion in the ANPR 

meant that affected entities had 

inadequate opportunity to provide 

input, leading to an inadequate 

rulemaking record.119

These arguments, however, are 

unpersuasive. Section 18 imposes no 

requirement the ANPR have the level of 

specificity the commenters demand. In 

fact, the statute only says the ANPR 

must include ‘‘a brief description of the 

area of inquiry under consideration, the 

objectives which the Commission seeks 

to achieve, and possible regulatory 

alternatives under consideration by the 

Commission.’’ 120 The Commission 

included a discussion of each of these 

topics in the ANPR.121 Moreover, the 

affected entities have had the chance to 

raise concerns with the Rule in their 

comments to the NPRM, which the 

Commission has considered and 

responded to in this Statement of Basis 

and Purpose. 

(b) Major Questions Doctrine 

Four commenters asserted the Rule 

implicates the ‘‘major questions’’ 

doctrine.122 According to the Supreme 

Court, the major questions doctrine is 

implicated in ‘‘extraordinary cases . . . 

in which the history and the breadth of 

the authority that the agency has 


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123West Virginia v. EPA, 597 U.S. 697, 721 (2022) 

(internal quotations cleaned up). Accord Biden v. 

Nebraska, 143 S. Ct. 2355, 2372 (2023). 

124Coalition, FTC–2023–0033–0884. 

125See, e.g., PDMI, FTC–2023–0033–0864. 

126 15 U.S.C. 57a(a)(1)(B). 

127West Virginia v. EPA, 597 U.S. at 723 (cleaned 

up). 

128The proposed Rule stated it applied to any 

form of negative option plan. Because ‘‘negative 

option plan’’ was a defined term in the old Rule 

specifically referring to prenotification plans, the 

Commission modifies the scope to apply to any 

form of ‘‘negative option program.’’ 

129Certain entities or activities are wholly or 

partially exempt from FTC jurisdiction under the 

FTC Act, including most depository institutions, 

charities, transportation and communications 

common carriers, and the business of insurance. 

Under Sections 4 and 5 of the FTC Act, however, 

the Commission’s jurisdiction extends to companies 

organized to carry on business for their own profit 

or that of their members, even if those companies 

are organized under state law as a not-for-profit 

entity. See California Dental Ass’n v. FTC, 526 U.S. 

756 (1999). But see n.151. 

130Chamber, FTC–2023–0033–0885. 

131 Id. 

132 Individual commenter, FTC–2023–0033–1136. 

133Electronic Transactions Association (‘‘ETA’’), 

FTC–2023–0033–1004. 

134 Id. 

135 Id. 

136 Id. IHRSA noted health and fitness 

membership charges are typically processed on a 

monthly basis from the time of agreement, and in 

many cases by a third-party service provider. 

IHRSA, FTC–2023–0033–0863. 

137NCTA asserted, ‘‘The proposed rule also fails 

to account for third-party sign-up arrangements. For 

example, programmers have arrangements with 

Roku, Amazon, Apple, and others that allow 

consumers to sign up through these third parties for 

their streaming services.’’ NCTA, FTC–2023–0033– 

0858. N/MA suggested the Commission ‘‘should 

make clear that when a sale with a negative option 

feature is made through a third party that controls 

the process of purchasing and/or cancelling a 

subscription with a negative option feature, any 

new requirements would apply to the third party 

only, and not to the company that fulfills the 

asserted, and the economic and political 

significance of that assertion, provide a 

reason to hesitate before concluding that 

Congress meant to confer such 

authority.’’ 123 Citing this authority, the 

commenters argue Congress only 

granted the FTC ‘‘limited and tailored 

authorities to regulate certain mediums 

and types of negative option marketing, 

but not all mediums and types as the 

NPRM encompasses.’’ 124 Further, they 

assert Congress never intended for the 

Commission to create a comprehensive 

regulatory scheme for negative option 

marketing that encompasses the variety 

of requirements proposed in the NPRM. 

Because negative option programs play 

an ever-increasing role in the economy, 

these commenters claim the proposed 

Rule would ‘‘dramatically alter’’ how 

companies structure their subscription 

services.125 More specifically, they 

assert the prohibition against 

misrepresentations, together with the 

ability to seek civil penalties in Federal 

court, would expand the FTC’s 

authority beyond that envisioned by 

Congress. 

However, far from exceeding 

Congressional intent, the Rule merely 

effectuates that intent in a way wholly 

consistent with the specific 

requirements set forth in Section 18 of 

the FTC Act. Specifically, Congress 

explicitly authorized the Commission to 

prescribe ‘‘rules which define with 

specificity acts or practices which are 

unfair or deceptive acts or practices in 

or affecting commerce (within the 

meaning of such section 5(a)(1)),’’ which 

‘‘may include requirements prescribed 

for the purpose of preventing such acts 

or practices.’’ 126 As demonstrated 

below, each of the Rule’s provisions 

identifies specific deceptive or unfair 

acts or practices that are prevalent 

throughout the marketplace and ties 

each Rule provision tightly to those 

findings. 

As the Supreme Court explained, 

courts use the ‘‘major questions 

doctrine’’ when examining 

‘‘extraordinary cases’’ where agency 

action would ‘‘make a radical or 

fundamental change’’ to a statutory 

scheme and assert ‘‘extravagant’’ 

authority over the national economy 

through ‘‘ambiguous statutory text,’’ 

citing ‘‘modest words,’’ ‘‘vague terms,’’ 

‘‘subtle device[s],’’ or ‘‘oblique or 

elliptical language.’’ 127 Here, no such 

extraordinary circumstance exists. The 

prohibitions and disclosures in the Rule 

do not effect a major change in the 

economy. In fact, all the substantive 

requirements in the Rule are already 

extant under section 5 of the FTC Act, 

ROSCA, or the TSR. Moreover, the 

Rules’ terms, as explained below, are 

neither vague, oblique, or elliptical—in 

fact, if anything, they are clearer than 

the legal authority just cited. 

B. Discussion of Specific Rule 

Provisions, Section-by-Section Analysis 

Below, for each provision of the 

proposed Rule, the Commission reviews 

the provision, summarizes comments 

received in response, and sets forth the 

final Rule with an analysis of the 

comments and other record evidence. 

1. Proposed § 425.1 Scope 

The Commission proposed 

eliminating the old Rule’s prescriptive 

requirements applicable to 

prenotification plans and replacing 

them with flexible, but enforceable, 

standards. The proposed requirements 

would apply to all forms of negative 

option marketing, including 

prenotification and continuity plans, 

automatic renewals, and free trial 

offers.128 The expanded coverage would 

establish a common set of requirements 

applicable to all types of negative option 

marketing. The proposed Rule would 

cover offers made in all media, 

including internet, telephone, in-person, 

and printed material, and would apply 

to all ‘‘negative option sellers.’’ With 

certain exceptions, not applicable here, 

the FTC Act provides the agency with 

jurisdiction over nearly every economic 

sector.129

(a) Negative Option Seller 

(1) Comments 

The scope of the proposed Rule 

covered ‘‘negative option seller,’’ 

defined to mean ‘‘the person selling, 

offering, promoting, charging for, or 

otherwise marketing goods or services 

with a negative option feature.’’ Several 

commenters raised concerns regarding 

the scope of this definition. 

The Chamber, for example, suggested 

the Commission delete the term 

‘‘promoting’’ from the definition.130 It 

cited a wide variety of actors who could 

be swept in by the term, including 

‘‘advertising companies, web designers, 

[and] entities in the supply chain,’’ who 

‘‘may not actually play an active role in 

determining’’ what consumers see and 

hear about negative option programs.131

An individual business commenter also 

criticized the term, saying to include 

‘‘promoting’’ ‘‘would potentially burden 

our technicians and our business when 

we provide service for equipment 

manufacturers that have their own 

service contract programs.’’ 132

ETA, representing the payments 

industry, addressed the words ‘‘charging 

for’’ in the definition.133 ETA 

interpreted those words not to cover 

‘‘intermediaries, such as payment 

processors, that merely effect the 

transfer of funds from the consumer 

buyer to the merchant seller resulting 

from a negative option feature.’’ 134 ETA 

noted that payment intermediaries 

typically ‘‘do not control the terms of 

the negative option feature and do not 

control the interface with the consumer 

buyer.’’ 135 ETA therefore suggested the 

final Rule ‘‘include an express 

exemption for payment processors and 

other intermediaries.’’ 136

Other commenters, while not 

specifically criticizing the definition of 

negative option seller, raised concerns 

about the scope of the proposed Rule 

where third parties are involved in 

marketing and cancellation. For 

example, several suggested the Rule 

exempt a seller who contracts with a 

third party for subscription enrollment, 

management, or cancellation 

services.137 PDMI argued, ‘‘it is 


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subscription.’’ N/MA, FTC–2023–0033–0873. 

Marketplace Industry Association (‘‘MIA’’) 

requested ‘‘the Commission clarify that where there 

are third-party payment platforms managing 

Subscriptions on behalf of businesses . . . 

(collectively, ‘‘Third Party Subscription 

Managers’’), that such Third Party Subscription 

Managers be legally responsible and legally liable 

for compliance with the proposed Rule. As is the 

case with Third Party Subscription Managers, 

businesses that offer Subscriptions have zero 

control over such Subscriptions, including the 

initiation of Subscriptions or the cancellation of 

Subscriptions. Said another way, it is impossible for 

businesses to comply with the proposed Rule where 

there are Third Party Subscription Managers. As 

such, the Association requests that the Commission 

make clear that Third Party Subscription Managers 

be responsible for compliance with the proposed 

Rule, including any penalties for noncompliance.’’ 

MIA, FTC–2023–0033–1008. 

138PDMI, FTC–2023–003–0864. 

139NRF, FTC–2023–0033–1005. 

140See also Section VII.B.1; Section VIII.A.1. 

141Chamber, FTC–2023–0033–0885. 

142See, e.g., FTC v. LeadClick Media, LLC, 838 

F.3d 158, 172 (2d Cir. 2016) (operator of affiliate 

marketing network liable where it did not create ads 

but ‘‘directly participat[ed] in the deceptive scheme 

by recruiting, managing, and paying a network of 

affiliates to generate consumer traffic through the 

use of deceptive advertising and allowing the use 

of deceptive advertising where it had the authority 

to control the affiliates participating in its 

network.’’). 

143 15 U.S.C. 8403. 

144See FTC v. Apex Capital Grp., LLC, No. 2:18– 

cv–09573 (C.D. Cal. 2018). In this ROSCA matter, 

the Commission amended its complaint to add 

payment intermediary defendants for their unlawful 

conduct in connection with the scheme. However, 

the Commission did not assert ROSCA claims 

against the payment intermediary defendants, 

instead asserting counts for credit card laundering 

and manipulation of chargeback levels as Section 5 

violations. 

145 Id.; see FTC v. First Am. Payment Sys., No. 

4:22–cv–00654 (E.D. Tex. 2022) (ROSCA case 

against payment processor for its unlawful acts and 

practices against its merchant customers). 

146E.g., FTC v. LeadClick Media, LLC, 838 F.3d 

158, 170 (2d Cir. 2016) (‘‘A defendant may be held 

liable for its own acts of deception under the FTC 

Act, whether by directly participating in deception 

or by allowing deceptive acts or practices to occur 

that are within its control.’’); see also FTC v. 

Inc21.com Corp., 688 F. Supp. 2d 927, 939 (N.D. 

Cal. 2010) (‘‘Even if Inc21 did not approve of the 

fraud (and it seems likely that it did approve), the 

fact remains that Inc21 is responsible for organizing 

this engine of fraud and reaping its profits. As such, 

Inc21 may certainly be held accountable[.]’’) 

(emphasis in original). 

147Asurion, FTC–2023–0033–0878; Florida 

Service Agreement Association, FTC–2023–0033– 

0882; American Property Casualty Insurance 

Association (‘‘APCIA’’), FTC–2023–0033–0996; 

National Association of Mutual Insurance 

Companies (‘‘NAMIC’’), FTC–2023–0033–1143. 

148See 15 U.S.C. 1012; 16 CFR 429(a)(6). 

149NAMIC, FTC–2023–0033–1143. 

150SCIC, FTC–2023–0033–0879 (noting SCIC’s 

comment to the ANPR stated most states have 

substantial regulatory frameworks for service 

contracts and that industry operates nationwide 

consistent with the intent of the proposed Rule); 

CTIA, FTC–2023–0033–0866 (noting service 

contracts are typically regulated by state 

departments of insurance and most states with 

autorenewal laws, including California, New York, 

and Oregon, provide an exemption for entities 

regulated by the state department of insurance); 

Frontdoor, Inc. (‘‘Frontdoor’’), FTC–2023–0033– 

0862 (noting majority of states have rigorous laws 

Continued 

imperative that the Proposed Rule 

exempt sellers from compliance with 

those provisions that are not under their 

direct control . . . [and] should also 

exempt the seller from any 

misrepresentations made by a thirdparty platform.’’ 138 NRF expressed 

concern a careful retailer could still 

‘‘face steep financial penalties for 

negligent misrepresentations 

(concerning, e.g., product efficacy) 

based on information provided by thirdparty vendors.’’ 139

(2) Analysis 

Based on the record, the Commission 

revises the definition of ‘‘negative 

option seller’’ to remove the word 

‘‘promoting,’’ but declines to create 

status-based exemptions.140 Moreover, 

the Commission clarifies it will enforce 

the final Rule in accordance with 

established section 5 principles 

regarding parties’ responsibilities for, 

and involvement in, relevant activity. 

This approach should fully address 

commenters’ concerns while 

maintaining the Rule’s consumer 

protections. 

As several commenters observed, a 

wide variety of actors may have 

secondary or tertiary roles in promoting 

products or services with a negative 

option feature. Further, as the Chamber 

noted, ‘‘many of those participants . . . 

may not actually play an active role in 

determining how the negative option is 

presented to the consumer.’’ 141

Similarly, participants in the promotion 

process may have no role in 

cancellation. Deleting the word 

‘‘promoting’’ from the definition of 

negative option seller addresses this 

issue by ensuring those who have no 

active participation in the negative 

option feature are outside the Rule’s 

coverage. However, this amendment 

does not mean all actors involved in 

promotion are exempt from the Rule. A 

participant who promotes and takes on 

a further role ‘‘selling, offering, charging 

for, or otherwise marketing goods or 

services with a negative option feature’’ 

remains subject to the final Rule, 

including the provisions covering 

‘‘promoting’’ such goods or services for 

those who meet the negative option 

seller definition.142

The Commission declines to adopt a 

status-based exemption for payment 

intermediaries. Such exemptions are 

overbroad, excluding actors engaged in 

the practices condemned by the Rule. 

For example, a payment processor 

selling its own services on a negative 

option basis, as opposed to just 

providing payment services for another 

negative option seller, is no different 

than any other business covered by the 

Rule. Additionally, as ETA correctly 

noted, the words ‘‘charging for’’ as used 

in the Rule do not cover intermediaries 

merely effecting the transfer of funds 

from the consumer buyer to the 

merchant seller. This is consistent with 

the Commission’s interpretation of 

ROSCA’s coverage of persons who 

‘‘charge or attempt to charge any 

consumer.’’ 143 Based on longstanding 

section 5 principles, the Commission 

has not enforced ROSCA against 

payment intermediaries solely for their 

conduct in effecting funds transfers.144

The Commission will apply the same 

principles to the Rule.145

Similarly, the Commission will not 

grant blanket exemptions to sellers who 

contract with third parties while 

offering subscription services. The 

Commission expects negative option 

sellers to evaluate their commercial 

relationships with the Rule’s provisions 

in mind. Even where a seller does not 

directly manage its negative option 

feature disclosures, consent, or 

cancellation, it can satisfy its obligations 

under the Rule by choosing to contract 

with third parties who act in accordance 

with the Rule and monitoring those 

parties’ performance. An exemption for 

all sellers who contract with third 

parties to manage aspects of their 

negative option programs would 

effectively nullify the Rule by 

incentivizing less than legitimate sellers 

to contract with actors engaged in 

deceptive practices to maximize 

negative option enrollments and 

frustrate cancellation with impunity. A 

seller cannot evade its responsibility to 

deal honestly with consumers by 

contracting with a third party who does 

not.146

(b) Insurance 

(1) Comments 

Several commenters asked the 

Commission to expressly exclude 

insurance and State-regulated service 

contracts from the Rule.147 They argued 

Congress prohibited the FTC from 

regulating the ‘‘business of insurance’’ 

in section 2 of the McCarran-Ferguson 

Act and the FTC exempted insurance 

sales in its Cooling-Off Rule.148 They 

also asserted, ‘‘State regulations in every 

jurisdiction require an insurer to give 

notice of a policy renewal,’’ and State 

rules prohibit negative options.149 Other 

commenters argued the Commission 

should exempt all service contract 

providers from the Rule due to existing 

State laws and regulations,150 regardless 


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for the offering, sale, and renewal of home service 

contracts, including the use of automatic renewals 

and applicable cancellation rights). 

151Nothing in this Rule, however, shall limit 

another agency’s ability to enforce this Rule within 

its own statutory authority, even if that authority is 

different than the FTC’s authority. See, e.g., 12 

U.S.C. 5581(b)(5)(B)(ii). 

152 FTC v. IAB Mktg. Assocs. LP, 746 F.3d 1228, 

1235 (11th Cir. 2014) (‘‘[T]he FTC Act applies to the 

business of insurance only to the extent that such 

business is not regulated by state law.’’). 

153The Supreme Court has explained that, under 

the McCarran-Ferguson Act, a three-part factual 

inquiry is necessary to evaluate whether any 

particular activity constitutes the business of 

insurance. See Union Labor Life Ins. Co. v. Pireno, 

458 U.S. 119, 129 (1982). First, does the activity 

have the effect of transferring or spreading a 

policyholder’s risk; second, is the activity an 

integral part of the policy relationship between the 

insurer and the insured; and third, is the practice 

limited to entities within the insurance industry. Id. 

This inquiry requires a factual analysis of the 

activities in question. 

154Moreover, service contract sellers, like other 

interested persons, may seek full or partial 

exemption from the final Rule. See Section VIII.A.1 

(discussing new § 425.8, Exemptions provision). 

155BSA, FTC–2023–0033–1015 (B2B software 

sellers); CTIA, FTC–2023–0033–0866 (wireless 

communication industry); ETA, FTC–2023–0033– 

1004 (payments industry); NCTA, FTC–2023–0033– 

0858 (internet and television); USTelecom, FTC– 

2023–0033–0876 (broadband). A sixth association, 

the U.S. Chamber of Commerce, asked the 

Commission to ensure that the scope of its costbenefit analysis includes business-to-business 

transactions. FTC–2023–0033–0885. 

156Anonymous commenter, FTC–2023–0033– 

1007; BSA, FTC–2023–0033–1015; CTIA, FTC– 

2023–0033–0866; ETA, FTC–2023–0033–1004; 

NCTA, FTC–2023–0033–0858; USTelecom, FTC– 

2023–0033–0876; ZoomInfo, FTC–2023–0033–0865. 

157 Individual commenter, FTC–2023–0033–0755; 

Individual commenter, FTC–2023–0033–0042. 

158Anonymous commenter, FTC–2023–0033– 

1007; CTIA, FTC–2023–0033–0866; NCTA, FTC– 

2023–0033–0858; ZoomInfo, FTC–2023–0033–0865. 

159CTIA, FTC–2023–0033–0866; NCTA, FTC– 

2023–0033–0858; USTelecom, FTC–2023–0033– 

0876; ZoomInfo, FTC–2023–0033–0865. 

160ZoomInfo, FTC–2023–0033–0865. 

161NCTA, FTC–2023–0033–0858. NCTA 

requested any final rule exclude individually 

negotiated business-to-business contracts. FTC– 

2023–0033–0858. 

162BSA, FTC–2023–0033–1015; NCTA, FTC– 

2023–0033–0858. The Commission discusses the 

subject of prevalence more broadly at Section VII.A. 

163 Individual commenter, FTC–2023–0033–0755. 

164Anonymous commenter, FTC–2023–0033– 

1007 (California); BSA, FTC–2023–0033–1015 

(California, Colorado, Delaware); ZoomInfo, FTC– 

2023–0033–0865 (California, Colorado, 

Connecticut, Delaware, Hawaii, New York, Oregon, 

Tennessee, Virginia). 

165 Individual commenter, FTC–2023–0033–0042. 

166 Id. 

167 16 CFR 429.0–429.3. 

168USTelecom, FTC–2023–0033–0876. 

169 Id. 

of whether they are engaged in the 

‘‘business of insurance’’ within the 

meaning of the McCarran-Ferguson Act. 

(2) Analysis 

The Commission declines to exempt 

insurance or service contracts from the 

Rule. The final Rule can be enforced by 

the Commission only against covered 

persons and activities within the 

Commission’s jurisdiction.151 Restating 

or further specifying each jurisdictional 

limit in the final Rule’s text, therefore, 

is not necessary. 

Additionally, the requested industrywide exemption is considerably broader 

than the FTC’s jurisdictional 

limitations. The McCarran-Ferguson Act 

does not exempt entities engaged in the 

business of insurance from the 

Commission’s jurisdiction unless such 

entities are subject to State 

regulation.152 Moreover, activities of 

entities within the insurance industry 

that are beyond the scope of the 

‘‘business of insurance’’ are subject to 

the Commission’s jurisdiction.153 No 

commenter provided any compelling 

reason to exempt these otherwise 

covered activities from the Rule. 

Finally, commenters’ citations to 

existing State laws and regulations 

governing service contract sellers 

indicate these sellers already provide 

disclosures and protections consistent 

with the Rule. As a practical matter, 

sellers who already provide consumers 

the Rule’s protections should not be 

burdened by its application.154

(c) Business-to-Business 

(1) Comments 

Nine commenters noted the NPRM 

did not expressly address whether the 

proposed Rule would apply to businessto-business (‘‘B2B’’) transactions. Seven, 

including five industry associations,155

said it should not apply.156 Two 

individuals disagreed.157

Commenters advocating against 

including B2B sales in the Rule asserted 

the Commission should presume 

businesses are more sophisticated than 

individual consumers,158 and 

contended B2B contracts typically are 

individually negotiated.159 For example, 

ZoomInfo maintained business 

consumers are generally ‘‘more 

sophisticated than individual 

consumers,’’ explaining B2B contracts 

‘‘are assumed to result from arm’slength negotiation and often benefit 

from professional legal counsel.’’ 160

Similarly, NCTA, an organization 

representing the internet and television 

industry, characterized business 

consumers as ‘‘typically sophisticated,’’ 

and said the Commission should not 

intervene in transactions based on 

‘‘[n]on-form contracts that are the 

subject of extensive bargaining between 

sophisticated companies.’’ 161

Seller and consumer commenters 

differed on whether the harmful 

negative option practices discussed in 

the NPRM are extant for B2B 

consumers. In support of excluding B2B 

transactions, two commenters asserted 

there is insufficient evidence of harm in 

the B2B context to support a prevalence 

finding.162 A B2B consumer, however, 

noted individuals and small businesses 

both suffer from the harms of deceptive 

and unfair negative option practices. 

‘‘As a small business owner,’’ the 

individual wrote, ‘‘as well as a 

consumer, I am especially aware of how 

purposely difficult many companies 

make it to cancel their services. From 

telephone companies to travel channel 

companies . . . to email targeting 

campaigns . . . the cancelling process is 

ridiculously complex and at times 

hidden, if it exists at all on their 

websites.’’ 163

Seller and consumer commenters also 

differed on the significance of existing 

State law B2B exclusions. Three B2B 

sellers recommended the Commission 

follow those States that exclude B2B 

transactions.164 A consumer, however, 

asserted such exclusions are why this 

Rule is necessary.165 Specifically, the 

commenter explained: ‘‘negative option 

marketing also greatly affect[s] many 

individual sellers and small 

businesses,’’ but due to B2B exclusions, 

‘‘some larger corporations or companies 

are able to take advantage of that 

loophole and use predatory negative 

option practices against individual 

sellers and small businesses.’’ 166

Some sellers also referred to other 

Federal regulations to support excluding 

businesses from the scope of the Rule. 

For instance, ETA and NCTA each 

noted the Commission excluded most 

B2B transactions in the TSR. ETA made 

the same observation about the Cooling 

Off Rule.167 Both CTIA and USTelecom 

approvingly cited the FCC’s approach. 

USTelecom explained, ‘‘the FCC has 

limited certain consumer protection 

rules to ‘mass-market retail services’ ’’ 

that are ‘‘ ‘marketed and sold on a 

standardized basis to residential 

customers, small businesses, and other 

end-user customers such as schools and 

libraries.’ ’’ 168 USTelecom further 

explained, ‘‘Mass-market retail services 

stand in contrast to ‘customized or 

individually negotiated arrangements’ 

that are typically offered to larger 

organizations.’’ 169

ETA questioned whether the 

Commission has authority to address 

B2B transactions. ETA argued the 

proposed Rule would let the 

Commission ‘‘interpose regulatory 

influence and law enforcement 

authority in contractual arrangements 

between businesses in a way that has 

not been authorized by Congress or 


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170ETA, FTC–2023–0033–1004. 171 Id. (citing FTC v. First Am. Payment Sys., No. 

4:22–cv–00654 (E.D. Tex. 2022)). 172ZoomInfo, FTC–2023–0033–0865. ETA also 

raised a concern about the definition of negative 

option seller, addressed in Section VII.B.1.a. 

173 15 U.S.C. 45(a). 

174See, e.g., Indep. Directory Corp. v. FTC, 188 

F.2d 468 (2d Cir. 1951) (deceptive practices in 

selling directory ads to businesses). 

175 Indep. Directory Corp., 188 F.2d at 470 

(applying Standard Educ. Soc.); see also, e.g., FTC 

v. LoanPointe, LLC, 525 F. App’x 696, 701 (10th Cir. 

2017) (FTC need only prove ‘‘the likelihood that a 

consumer (here, employers)’’ would be deceived); 

FTC v. Crittenden, 19 F.3d 26 (9th Cir. 1994) (Table) 

(noting stipulated judgment with B2B office 

supplier); FTC v. Inc21.com Corp., 688 F. Supp. 2d 

927 (N.D. Cal. 2010) (preliminary injunction against 

deceptive and unfair B2B billing scheme); FTC v. 

IFC Credit Corp., 543 F. Supp. 2d 925, 934 (N.D. 

Ill. 2008) (FTC Act applies to B2B sales). 

176See Fed. Trade Comm’n, ‘‘Protecting Small 

Businesses: Cases,’’ https://www.ftc.gov/businessguidance/small-businesses/protecting-smallbusinesses-cases (last visited October 23, 2024); 

Fed. Trade Comm’n, ‘‘Protecting Small Businesses,’’ 

https://www.ftc.gov/business-guidance/smallbusinesses (last visited October 23, 2024); Fed. 

Trade Comm’n, ‘‘Scams and Your Small Business: 

A Guide For Business,’’ https://www.ftc.gov/ 

business-guidance/resources/scams-your-smallbusiness-guide-business (last visited October 23, 

2024). 

177See Press Release, Fed. Trade Comm’n, ‘‘FTC, 

BBB, and Law Enforcement Partners Announce 

Results of Operation Main Street: Stopping Small 

Business Scams Law Enforcement and Education 

Initiative’’ (June 18, 2018), https://www.ftc.gov/ 

news-events/press-releases/2018/06/ftc-bbb-lawenforcement-partners-announce-results-operationmain (last visited October 23, 2024). 

178TSR, 89 FR 26760 (April 16, 2024). 

179 FTC v. First Am. Payment Sys., No. 4:22–cv– 

00654 (E.D. Tex. 2022). 

180 In describing the basis for the 

misrepresentations provision of the proposed Rule, 

the NPRM cited (among other cases) First Am. 

Payment Sys. NPRM, 88 FR 24726 n.65. See also 

ETA, FTC–2023–0033–1004. 

181 In re Dun & Bradstreet, Inc., FTC Docket No. 

C–4761 (2022). 

182 FTC v. Vonage Holdings Corp., No. 3:22–cv– 

06435 (D.N.J. 2022). 

183The Adobe matter provides another recent 

example of a matter alleging unlawful negative 

option practices targeting both individual and 

business consumers. United States v. Adobe, Inc., 

No. 5:24–cv–03630 (N.D. Cal. 2024). 

184See section VII.B.1.a. 

185See 16 CFR 2.3. 

186The Vonage order expressly exempts negative 

option feature provisions in B2B contracts where 

the defendants ‘‘possess evidence that consumers 

negotiated significant terms of the negative option 

feature that are only negotiable with business 

consumers.’’ FTC v. Vonage Holdings Corp., No. 

3:22–cv–06435 (D.N.J. 2022). The final Rule is less 

prescriptive and more flexible than that order, 

Continued 

justified by the Commission’s own 

rationale for the Proposed Rule.’’ 170

ETA cited the Commission’s use of 

ROSCA in the First American Payment 

Systems case to illustrate its view the 

Rule’s application in the B2B context 

would be impermissible regulation of 

‘‘an automatic renewal clause in an 

arm’s length commercial agreement.’’ 171

Finally, ETA and ZoomInfo argued 

various provisions of the Rule, such as 

the disclosure and notice requirements, 

could present unusual implementation 

problems in B2B transactions. For 

instance, ETA asserted disclosure 

requirements could result in operational 

uncertainty because the Commission 

did not consider all the typical terms 

included in B2B agreements. Similarly, 

ZoomInfo explained ‘‘B2B agreements 

are often complex, involving multiple 

decision-makers and points of contact, 

who might rotate or leave their roles 

over the course of a contract.’’ 172

(2) Analysis 

The final Rule, like the proposed 

Rule, covers B2B transactions. It has 

been the Commission’s longstanding 

view that section 5 of the FTC Act 173

protects business consumers as well as 

individual consumers. Moreover, 

commenters’ arguments that, under 

section 5, all business consumers must 

be held to a heightened standard of 

sophistication are inconsistent with 

settled law. 

The Commission has long enforced 

the FTC Act against those who deceive 

and act unfairly to businesses and other 

organizations.174 As the Supreme Court 

explained in FTC v. Standard Educ. 

Soc., 302 U.S. 112, 116 (1937), ‘‘Laws 

are made to protect the trusting as well 

as the suspicious.’’ This principle 

applies no less to the business consumer 

than to the individual.175 The 

Commission maintains a decades-long 

list of business protection cases on its 

website and dedicates significant effort 

to educate and protect small 

businesses.176 Indeed, the Commission 

has made protecting small businesses a 

priority.177

Moreover, the TSR never exempted 

B2B transactions entirely. Importantly, 

the Commission recently amended the 

TSR to cover a broader scope of B2B 

activity. Specifically, in 2024, the 

Commission expanded the TSR to 

prohibit material misrepresentations 

and false or misleading statements in 

B2B calls due to the ongoing harm to 

small businesses from such practices.178

Additionally, recent Commission 

actions to protect small businesses 

underscore the fact deceptive practices 

pertaining to negative option features 

occur in B2B transactions just as they do 

with individual consumers. None of 

these cases present the arms-length 

negotiation of contracts by sophisticated 

parties that commenters claim to be 

universal. For example, in its 2022 

action against First American Payment 

Systems,179 the Commission alleged the 

defendants violated section 5 and 

ROSCA by making false claims about 

fees and cost savings to persuade 

merchants in small- and medium-sized 

businesses, many of whom had limited 

English proficiency, to enter into 

payment processing agreements.180

Once enrolled, the defendants allegedly 

withdrew funds from merchants’ 

accounts without consent, and made it 

difficult and expensive to cancel the 

service. Under a stipulated court order, 

the defendants must (among other 

things) make it easier for merchants to 

cancel their services. 

In the Commission’s 2022 Dun & 

Bradstreet 181 matter, the complaint 

alleged multiple deceptive practices 

pertaining to products the defendant 

marketed to small- and medium-sized 

businesses, in violation of section 5. The 

resulting consent order includes 

substantial provisions pertaining to 

negative option features. 

The Commission’s 2022 action against 

Vonage 182 also illustrates this point. 

The complaint detailed the defendants’ 

deceptive and unfair practices targeting 

both business and residential customers 

and alleged those practices violated 

section 5 and ROSCA.183 The stipulated 

court order includes multiple provisions 

relating to consent, cancellation, and 

disclosures pertaining to both 

individual and business consumers. 

Nonetheless, two arguments for 

excluding B2B transactions warrant 

additional discussion. First, several 

commenters elide the distinction 

between B2B agreements generally and 

individually negotiated B2B agreements. 

It is neither the purpose nor the effect 

of the final Rule to prevent businesses 

from entering into agreements with 

individually negotiated negative option 

terms. By requiring the cancellation 

mechanism to be ‘‘at least as easy to 

use’’ as the consent mechanism, the 

final Rule incorporates a symmetrical 

standard that accounts for individually 

negotiated B2B agreements. A B2B 

consumer who consents to a negative 

option feature through an individually 

negotiated term of an agreement can 

also individually negotiate the 

cancellation mechanism. Moreover, as 

the Commission noted above, it will 

enforce this Rule in the same manner in 

which it enforces section 5 of the FTC 

Act.184 The Commission has not used its 

consumer protection authority in the 

type of large individually negotiated 

B2B transactions commenters are 

worried about.185 Unsurprisingly, no 

commenter cited any historical instance 

to the contrary. Thus, the Rule preserves 

the ability of sophisticated business 

consumers to individually negotiate 

B2B agreement terms.186


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thereby promoting more flexibility in the 

marketplace. 

187Section II of this Notice contains descriptions 

of these various plans. 

188Cal. Bus. & Prof. Code section 17601 and DC 

Code section 28A–202. 

189See, e.g., BSA, FTC–2023–0033–1015 

(material is not defined); Chamber, FTC–2023– 

0033–0885 (same). 

190Center for Data Innovation (‘‘CDI’’), FTC– 

2023–0033–0887; see also Act App Association, 

FTC–2023–0033–0874; NRF, FTC–2023–0033–1005 

(failed to defined ‘‘as simple as’’). 

191 International Carwash Association, FTC– 

2023–0033–1142. 

192See, e.g., Anonymous commenter, FTC–2023– 

0033–1007; Zoominfo, FTC–2023–0033–0865; 

CTIA, FTC–2023–0033–0866; BSA, FTC–2023– 

0033–1015. 

193 Individual commenter, FTC–2023–0033–0042. 

194See, e.g., Asurion, FTC–2023–0033–0878 

(exempt service contracts); Chamber, FTC–2023– 

0033–0885 (exclude promoting); ETA, FTC–2023– 

0033–1004 (exclude ‘‘charging for’’). These requests 

are more appropriately addressed in the scope and 

requested exemptions, and the Commission does 

not consider them here. 

195Save was defined in the proposed Rule as an 

attempt by a seller to present any additional offers, 

modifications to the existing agreement, reasons to 

retain the existing offer, or similar information 

when a consumer attempts to cancel a negative 

option feature. 

196ESA, FTC–2023–0033–0867. PDMI argued 

similarly as to the definition of save. FTC–2023– 

0033–0864 (arguing sellers should be able to be able 

to immediately discuss pause, skip or modification 

options without having to ask for permission, 

particularly because it is impossible to know which 

customers prefer to cancel as opposed to merely 

modify their current plan). Accord USTelecom, 

FTC–2023–0033–0876 (definition of Save overly 

broad); RILA, FTC–2023–0033–0883 (modify 

definition of save to allow short clarification and 

confirmation of intent follow-up communications); 

Chamber, FTC–2023–0033–0885; CDI, FTC–2023– 

0033–0887 (‘‘Commission should exclude 

information about permanent, irreparable harms 

that may result from cancellation, and is relevant 

to the current subscription or product plan.’’); 

CCIA, FTC–2023–0033–0984; IAB, FTC–2023– 

0033–1000 (definition of save overly broad and 

‘‘would prohibit the presentation of useful, 

consumer-friendly details about a consumer’s 

subscription before they cancel it.’’). 

197See, e.g., NCTA, FTC–2023–0033–0858 

(definition does not take into account small 

screens); Chamber, FTC–2023–0033–0885 (‘‘The 

requirements that disclosure on the internet or 

mobile applications be ‘unavoidable’ and 

‘immediately adjacent’ rase practical concerns.’’); 

CCIA, FTC–2023–0033–0984 (definition should 

‘‘hew closely to the Commission’s guidance in its 

.com Disclosures policy to ensure regulatory 

consistency.’’). 

198NFIB, FTC–2023–0033–0789. Accord Kuehn, 

FTC–2023–0033–0871 (proposed revised definition 

of negative option feature); Chamber, FTC–2023– 

0033–0885 (requests the definition of negative 

option feature to be revised to exclude monthly 

subscription services). See section VII.B.4 for 

further discussion of proposed modifications. See 

also ETA, FTC–2023–0033–1004 (clarify and 

narrow ‘‘automatic renewal in the definition). 

199NFIB, FTC–2023–0033–0789 (requesting 

specific examples of each type of program be 

included in the definition of negative option 

feature); see also IHRSA, FTC–2023–0033–0863 

(observes the Commission does not define what 

‘‘automatic renewal, continuity plan’’ and other 

examples of negative option features mean). 

Second, it appears several 

commenters mistakenly thought the 

required simple cancellation 

mechanism would necessarily terminate 

all aspects of any broader contract or 

agreement. In fact, this provision only 

pertains to cancellation of the negative 

option feature. Complex commercial 

agreements, such as those described by 

ETA, will have numerous provisions 

unrelated to negative option features. 

Nothing in this Rule prohibits these 

provisions from being subject to 

separate cancellation and termination 

terms. 

2. Proposed § 425.2 Definitions 

In the NPRM, the proposed Rule set 

forth several definitions. For example, 

the proposed Rule defined ‘‘negative 

option feature’’ as a contract provision 

under which the consumer’s silence or 

failure to take affirmative action to reject 

a good or service or to cancel an 

agreement is interpreted by the negative 

option seller as acceptance or 

continuing acceptance of an offer. This 

definition is consistent with the TSR 

and ROSCA (which references the TSR’s 

definition). The proposed term includes, 

but is not limited to, automatic 

renewals, continuity plans, free-to-pay 

conversion or fee-to-pay conversions, 

and pre-notification negative option 

plans.187

Additionally, the proposed Rule 

defined ‘‘clear and conspicuous,’’ 

‘‘negative option seller,’’ and ‘‘save.’’ To 

define ‘‘clear and conspicuous,’’ the 

FTC imported its definition developed 

through years of enforcement 

experience. As explained in the NPRM, 

the proposed definition substantially 

overlaps with the concepts provided in 

California and District of Columbia 

negative option laws,188 with one 

exception. Specifically, the District of 

Columbia definition requires 

disclosures to be visually proximate to 

any request for consumer consent. The 

final Rule incorporates this requirement 

in a separate consent section. 

(a) Summary of Comments 

The Commission did not receive any 

comments specifically supporting any 

proposed definition, though several 

commenters generally supported the 

concepts incorporated in the 

definitions, such as ‘‘clear and 

conspicuous disclosures.’’ Several 

commenters critiqued the Commission’s 

omission of certain definitions, such as 

‘‘material’’ in connection with § 425.3 

and § 425.4,189 ‘‘simple cancellation 

mechanism,’’ 190 ‘‘practical,’’ and 

‘‘normal business hours,’’ 191 because 

these terms are used throughout the 

Rule. Other commenters asked the 

Commission to add a definition for 

‘‘consumer’’ that excludes 

businesses,192 while another asked the 

Commission to include small businesses 

in that definition.193 Similarly, other 

commenters asked the Commission to 

‘‘exempt’’ certain industries from, or 

otherwise alter the scope of, the 

definition of ‘‘negative option 

seller.’’ 194

Several commenters critiqued the 

proposed definitions. For example, ESA 

stated ‘‘the definition of ‘save’ 195 is 

overly broad and would prohibit the 

presentation of useful, consumerfriendly details about a consumer’s 

subscription before they cancel it.’’ 196

Other commenters questioned why the 

‘‘clear and conspicuous’’ definitions 

says a disclosure is not clear and 

conspicuous, if a consumer must click 

on a hyperlink to see it.197

Additionally, several commenters 

requested the Commission revise certain 

of its proposed definitions for clarity. 

For instance, the National Federation of 

Independent Businesses (‘‘NFIB’’) asked 

the Commission to revise the definitions 

for ‘‘clear and conspicuous’’ and 

‘‘negative option feature’’ to ‘‘make their 

meanings clearer’’ 198 by, for example, 

using simpler words in the clear and 

conspicuous definition (‘‘words and 

grammar’’ versus ‘‘diction and syntax’’) 

or by providing detailed examples of 

each type of program covered in the 

definition of negative option feature. 

NFIB further explained ‘‘Those 

regulated by and served by subsection 

425.2(d) most likely would understand 

the meaning of an automatic renewal, 

but perhaps not the meaning of the 

other examples.’’ 199

(b) Analysis 

Based on the record, the Commission 

makes several changes to the proposed 

definitions. First, as explained in 

sections VII.B.1.3 (material) and 

VII.B.6.c.2.b.ii (interactive electronic 

medium), it adds definitions of material 

and interactive electronic medium for 

clarity. Further, as discussed in section 

VII.B.4, the Commission modifies the 

definition of clear and conspicuous. 

Second, the Commission removes the 

definition of save. As discussed in 

section VII.B.6.c the proposed saves 

provision did not achieve the right 

balance between protecting consumers 

from unfair tactics and allowing sellers 

to provide necessary and valuable 

information about cancellation. 

Therefore, the Commission declines to 

include the NPRM’s proposed limitation 

on saves, and instead will consider 

issuing an SNPRM in the future for 


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200NFIB, FTC–2023–0033–0789. 

201Further, as explained in n.307, the 

Commission also declines to revise the definition of 

‘‘clear and conspicuous’’ to replace the words 

‘‘diction and syntax’’ with ‘‘words and grammar.’’ 

202NPRM, 88 FR 24734. 

203NPRM, 88 FR 24726. 

204 Id. (citing e.g., FTC v. Tarr, No. 3:17–cv–02024 

(S.D. Cal. 2017); FTC v. First Am. Payment Sys., No. 

4:22–cv–00654 (E.D. Tex. 2022); FTC v. XXL 

Impressions, LLC, No. 1:17–cv–00067 (D. Me. 2017); 

United States v. MyLife.com, Inc., No. 2:20–cv–6692 

(C.D. Cal. 2020); FTC v. Health Rsch. Labs., LLC, 

No. 2:17–cv–00467 (D. Me. 2017); FTC v. Leanspa, 

LLC, No. 3:11–cv–01715 (D. Conn. 2011); FTC v. 

WealthPress, Inc., No. 3:23–cv–00046 (M.D. Fla. 

2023); FTC v. BunZai Media Grp., Inc., No. 2:15– 

cv–04527 (C.D. Cal. 2015); FTC v. Willms, No. 2:11– 

cv–00828 (W.D. Wash. 2011); FTC v. Universal 

Premium Servs., No. 2:06–cv–00849 (C.D. Cal. 

2006); FTC v. Remote Response Corp., No. 1:06–cv– 

20168 (S.D. Fla. 2006); and FTC v. Johnson, No. 

2:10–cv–02203 (D. Nev. 2016). 

205NPRM, 88 FR 24726. 

206State AGs, FTC–2023–0033–0886. 

207 Id. 

208Law Professors, FTC–2023–0033–0861. 

209 Id., citing Better Business Bureau, ‘‘BBB 

Investigation Update: Free Trial Offer Scams’’ (Apr. 

2020), https://www.bbb.org/article/news-releases/ 

22040-bbb-update-free-trial-offerscams; C. Steven 

Baker & Better Business Bureau, ‘‘Subscription 

Traps and Deceptive Free Trials Scam Millions with 

Misleading Ads and Fake Celebrity Endorsements’’ 

(Dec. 2018), https://www.bbb.org/article/ 

investigations/18929-subscription-traps-anddeceptive-free-trialsscam-millions-with-misleadingads-and-fake-celebrity-endorsements. The Law 

professors further pointed to evidence found by 

searching BBB’s ScamTracker for terms like 

‘‘subscription.’’ See, e.g., Better Business Bureau, 

ScamTracker, ID #720953, https://www.bbb.org/ 

scamtracker/lookupscam/720953. They 

additionally cited Consumer Financial Protection 

Bureau, ‘‘CFPB Charges TransUnion and Senior 

Executive John Danaher with Violating Law 

Enforcement Order’’ (Apr. 2022), https://

www.consumerfinance.gov/about-us/newsroom/ 

cfpb-charges-transunion-and-seniorexecutive-johndanaher-with-violating-law-enforcement-order/; 

David Pierson, ‘Santa Monica fitness brand 

Beachbody is fined $3.6 million over automatic 

renewals,’’ L.A. Times (Aug. 29, 2017), https://

www.latimes.com/business/la-fi-beachbody20170829-story.html; Bruce A. Craig, NegativeOption Billing—Understanding the Stealth Scams 

of the ‘90s, 7 Loy. Consumer L. Rev. 5 (1994). 

210Law Professors, FTC–2023–0033–0861. 

211Law Professors, FTC–2023–0033–0861. 

212CTA, FTC–2023–0033–0997; ESA, FTC–2023– 

0033–0867; IAB, FTC–2023–0033–1000; N/MA, 

FTC–2023–0033–0873; RILA, FTC–2023–0033– 

0883; TechFreedom, FTC–2023–0033–0872. See 

section VII.A for a discussion of prevalence 

addressing these comments. 

213ANA, FTC–2023–0033–1001; CCIA, FTC– 

2023–0033–0984; Coalition, FTC–2023–0033–0884; 

ESA, FTC–2023–0033–0867; Frontdoor, FTC–2023– 

0033–0862; IAB, FTC–2023–0033–1000; NRF, FTC– 

2023–0033–1005; RILA, FTC–2023–0033–0883. See 

section VII.A for a discussion addressing these 

comments. 

214TechNet, FTC–2023–0033–0869. 

further comment. Accordingly, without 

the saves provision, the Commission 

determines there is no need for a 

defined term at this time. 

Although several commenters 

critiqued the lack of definitions for such 

terms as ‘‘simple cancellation 

mechanism,’’ ‘‘practical,’’ or ‘‘normal 

business hours,’’ the Commission 

addresses these concerns with further 

clarification, rather than with formal 

definitions, in the section-by-section 

analysis below. As to commenter 

requests for a definition of ‘‘consumer’’ 

expressly excluding (or including) 

business-to-business transactions, the 

Commission similarly addresses these 

requests in the sections regarding scope 

and requested exemptions, above. 

Finally, NFIB asked the Commission 

to add specific examples of each type of 

negative option program to the text of 

the Rule, stating those served by the 

Rule would likely not understand these 

‘‘terms of art.’’ 200 The Commission 

discusses examples of each type of 

negative option program in more detail 

as part of the SBP at section II. Further, 

the Commission typically engages in 

robust consumer and business 

education campaigns when 

promulgating and issuing final rules and 

will do so here. The Commission 

therefore disagrees the Rule must 

incorporate these examples into the 

text.201

3. Proposed § 425.3 Misrepresentations 

Section 425.3 of the proposed Rule 

prohibited sellers from misrepresenting 

‘‘any material fact related to the 

transaction, such as the negative option 

feature, or any material fact related to 

the underlying good or service.’’ 202 As 

explained in the NPRM, 

‘‘misrepresentations in negative option 

marketing cases often involve deceptive 

representations not only related to the 

negative option feature but to the 

underlying product (or service) or other 

aspects of the transaction as well.’’ 203

These include ‘‘misrepresentations 

related to costs, product efficacy, free 

trial claims, processing or shipping fees, 

billing information use, deadlines, 

consumer authorization, refunds, [and] 

cancellation.’’ 204

The FTC Act provides the legal basis 

for the Commission to prevent and 

remedy misrepresentations in the 

negative option context. Specifically, 

section 5(a)(1) of the FTC Act declares 

unfair or deceptive acts or practices in 

or affecting commerce to be unlawful. 

Negative option sellers making material 

misrepresentations are engaged in 

deceptive practices. Addressing these 

practices through the Rule prevents 

deception by giving the Commission the 

ability to seek civil penalties (where 

appropriate under 5(m)(1)(a)), where 

they are not already provided, thus 

deterring misrepresentations, protecting 

consumers, and leveling the playing 

field for ‘‘honest sellers who must 

compete with those who engage in 

deception.’’ 205

(a) Summary of Comments 

The State AGs strongly supported this 

provision, stating, for example, it would 

‘‘combat[ ] seller misrepresentations, by 

providing the FTC with authority to 

seek civil penalties and consumer 

redress for material misrepresentations 

in all types of media.’’ 206 Echoing the 

NPRM, they explained, ‘‘[l]ike the FTC, 

we have found that negative option 

marketing cases ‘often involve deceptive 

representations not only related to the 

negative option feature but to the 

underlying product (or service) or other 

aspects of the transaction as well.’ ’’ 207

Law Professors further supported 

prohibiting ‘‘material 

misrepresentations . . . whether or not 

the false claim is exclusively about the 

negative option feature.’’ 208 They, too, 

offered evidence of the prevalence of 

misconduct, stating ‘‘entities like the 

Better Business Bureau have long 

reported, based on FTC and other data, 

the prevalence of misrepresentation in 

certain negative option arrangements, 

and non-FTC enforcement efforts 

confirm the problem.’’ 209 Citing 

multiple sources, they argued the 

‘‘Commission thus has more than ample 

‘reason to believe that’ co-occurring 

negative option violations and other 

misrepresentations ‘are prevalent.’ ’’ 210

These commenters further argued the 

Commission should not adopt a 

narrower provision limited strictly to 

the elements of a negative option feature 

because, in their view, it would be 

difficult ‘‘to fully separate 

misrepresentations regarding the 

negative option feature from all other 

material misrepresentations.’’ 211

Several commenters, largely trade 

groups and sellers, criticized the 

proposed provision. As discussed in 

section V.A, several questioned the 

prevalence of misrepresentations 212 and 

asserted the provision was not within 

the scope of the ANPR.213 Additionally, 

several commenters argued the 

provision is overbroad, and suggested it 

is unnecessary in light of existing law. 

Finally, they proposed ways to narrow 

the proposed provision. 

Several commenters objected to the 

scope of the proposed provision. Citing 

Commissioner Wilson’s dissent to the 

NPRM, TechNet noted the proposed 

Rule ‘‘would capture alleged 

misrepresentations regarding the 

underlying product or service ‘wholly 

unrelated’ to the negative option 

feature.’’ 214 Three commenters asserted 

no current trade regulation rule 


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215NCTA, FTC–2023–0033–0858; PDMI, FTC– 

2023–0033–0864; TechFreedom, FTC–2023–0033– 

0872. 

216For example, the Coalition and IAB both said, 

‘‘The NPRM fails, however, to identify which 

claims would constitute a material fact, and thus 

fails to identify covered acts with the requisite level 

of specificity.’’ Coalition, FTC–2023–0033–0884; 

IAB, FTC–2023–0033–1000. PDMI similarly 

claimed the proposed provision’s lack of specificity 

‘‘renders [the proposed Rule] overly vague and 

unlawful.’’ FTC–2023–0033–0864. See also ESA, 

FTC–2023–0033–0867; TechFreedom, FTC–2023– 

0033–0872; USTelecom, FTC–2023–0033–0876 

(citing Katharine Gibbs School v. FTC, 612 F.2d 658 

(2d Cir. 1979)). 

217ACT App Association, FTC–2023–0033–0874. 

218MIA, FTC–2023–0033–1008. 

219Chamber, FTC–2023–0033–0885. See also CDI, 

FTC–2023–0033–0887 (‘‘consumers could argue 

that the dish detergent they received through a 

subscription service did not clean dishes as 

advertised.’’). 

220TechNet, FTC–2023–0033–0869. 

221ESA, FTC–2023–0033–0867; see also IAB, 

FTC–2023–0033–1000 (predicting ‘‘autorenewing 

(sic) subscriptions will become less common and 

significantly more costly because of the regulatory 

risks’’ and ‘‘businesses and consumers will be 

harmed by the loss of convenience and savings 

offered by autorenewal arrangements.’’); Chamber, 

FTC–2023–0033–0885 (contending ‘‘many entities 

may forgo negative options altogether. This 

decreases consumer choice in the marketplace 

given the clear popularity and use of negative 

option features across the economy.’’). 

222ANA, FTC–2023–0033–1001; Consumer 

Technology Association (‘‘CTA’’), FTC–2023–0033– 

0997; N/MA, FTC–2023–0033–0873. 

223NRF, FTC–2023–0033–1005; RILA, FTC– 

2023–0033–0883; SFE Energy, Inc. (‘‘SFE’’), FTC– 

2023–0033–1151. 

224NRF, FTC–2023–0033–1005. 

225PDMI, FTC–2023–003–0864. 

226 IAB, FTC–2023–0033–1000. 

227BSA, FTC–2023–0033–1015; see also 

Chamber, FTC–2023–0033–0885 (noting 

‘‘materiality’’ not defined in NPRM). 

228RILA, FTC–2023–0033–0883. 

229BSA, FTC–2023–0033–1015. 

230CCIA, FTC–2023–0033–0984; CDI, FTC–2023– 

0033–0887; see also TechFreedom, FTC–2023– 

0033–0872. 

231 15 U.S.C. 57a(b)(2). 

prohibits misrepresentations so 

broadly.215

Similarly on scope, some commenters 

also argued the proposed language 

lacked the specificity necessary to give 

sellers notice of what conduct would 

violate the Rule.216 For example, ACT 

App Association asserted, 

‘‘Notwithstanding best efforts, tech 

startups’ ability to flawlessly adhere to 

the vague and broad language used in 

this rule is unrealistic.’’ 217

A few commenters provided 

hypotheticals or asked rhetorical 

questions to illustrate concerns about 

the proposal’s breadth. MIA, for 

example, stated, ‘‘if a streaming service 

advertises, ‘movies that you will love,’ 

but you do not ‘love’ them, is that a 

violation of this rule subject to 

penalties? If a housekeeping service 

claims, ‘great cleaning every time,’ but 

the resulting cleanliness is not up to the 

consumer’s ‘standards,’ will that trigger 

this provision and any resulting 

penalties?’’ 218 The Chamber asked, 

‘‘[c]ould a privacy policy, for example, 

be considered a material representation 

covered under this requirement?’’ 219

Many of these commenters argued the 

reach of the proposed Rule would 

negatively impact consumers by 

discouraging negative option offerings. 

TechNet said, ‘‘[f]or a variety of 

subscription services, the main drivers 

of consumer engagement are the 

subscription services’ ability to provide 

financial savings, convenience, and 

access to premium services. . . . 

Unfortunately, the NPRM ignores these 

benefits and would discourage the 

offering of subscription services 

altogether.’’ 220 ESA feared ‘‘this section 

will discourage industry members from 

developing and offering innovative 

negative option plans that consumers 

will enjoy.’’ 221

Several commenters asserted existing 

laws and regulations make the proposed 

provision unnecessary. Some argued 

section 5’s prohibition against deceptive 

practices already provides the 

Commission sufficient authority on this 

issue.222 Others asserted State laws and 

regulations prohibiting 

misrepresentations are sufficient to 

protect the public.223

Commenters were divided on 

ROSCA’s coverage. NRF, for example, 

said ‘‘[i]n light of the Commission’s 

decision that ROSCA already prohibits 

deceptive statements made in 

connection with a subscription, even if 

not directly related to subscription 

terms, many of the proposed 

amendments are unnecessary.’’ 224 In 

contrast, PDMI said while MoviePass 

‘‘perhaps reflects a colorable approach,’’ 

the application of ROSCA there 

‘‘exceeded Congress’ intent.’’ 225

Similarly, IAB asserted the proposed 

Rule would break new ground by 

‘‘grant[ing] the Commission authority to 

seek monetary remedies against a firsttime offender for misrepresentations 

that would not give rise to monetary 

relief if made outside the context of an 

autorenewal agreement.’’ 226

Several commenters recommended 

changes if the proposed provision 

remains in the Rule. BSA, for example, 

suggested the Commission should 

define the term ‘‘material,’’ citing the 

TSR and the FTC Policy Statement on 

Deception as examples.227 Separately, 

RILA urged the Commission ‘‘to include 

clear language stating a ‘reasonable 

person standard’ will apply to 

determinations of ‘material facts’ related 

to products.’’ 228

Several commenters suggested the 

Commission limit the misrepresentation 

provision to the terms of the negative 

option feature. For instance, BSA 

advocated for limiting the provision ‘‘to 

facts relating to the transaction and not 

every material fact relating to the 

underlying good or service.’’ 229 CCIA 

and CDI agreed, stating the final phrase 

should instead cover only those material 

facts related to the underlying negative 

option feature and exclude ‘‘any 

material fact related to the underlying 

good or service.’’ 230

(b) Analysis 

Based on the record, the Commission 

adopts a clarified version of the material 

misrepresentation section and adds a 

definition for further clarification. 

Specifically, the final Rule omits the 

proposed language referring to ‘‘any 

material fact related to the transaction, 

such as the negative option feature, or 

any material fact related to the 

underlying good or service’’ and instead 

prohibits misrepresentation of ‘‘any 

material fact,’’ and defines ‘‘material’’ 

consistent with the TSR and section 5 

of the FTC Act. Further, to enhance 

clarity and specificity, the text lists 

several examples of potentially material 

fact categories, taken from Commission 

precedent. 

As further explained below: (1) 

despite commenters’ concerns to the 

contrary, this provision is consistent 

with the ANPR and prevalence 

requirements of section 18 of the FTC 

Act; (2) consistent with ROSCA, the 

final provision is not limited to material 

misrepresentations about the negative 

option feature itself; (3) the Commission 

declines to exclude any subset of 

material misrepresentations from the 

scope of the Rule; and (4) for clarity, the 

Commission adds a definition of 

‘‘material’’ consistent with established 

law of section 5 and other Commission 

Rules. 

(1) Adoption of a prohibition against 

misrepresentations is consistent with 

the ANPR and is appropriate to address 

prevalent unfair or deceptive acts or 

practices. 

Prior to the publication of any notice 

of proposed rulemaking promulgated 

under the Magnuson Moss Act, the 

Commission must publish an advance 

notice of proposed rulemaking 

(ANPR).231 That notice must contain a 

‘‘brief description of the area of inquiry 

under consideration, the objectives 

which the Commission seeks to achieve, 

and possible regulatory alternatives 


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232 15 U.S.C. (b)(2)(A)(i). 

233Section 425.3 is the only remaining section as 

to which commenters made this ANPR argument. 

234See section VII.1.a. In the cited Commission 

law enforcement matters, the Commission has 

applied its established materiality standard, 

limiting its actions to misrepresentations that are 

likely to affect consumers’ choice of, or conduct 

regarding, goods or services. In re Cliffdale Assocs., 

Inc., 103 F.T.C. 110 (1984). That is to say, in the 

cited matters the Commission alleged defendants 

made misrepresentations to induce consumers to 

enter into negative option programs. 

235 15 U.S.C. 57a(a)(1)(B). 

236 15 U.S.C. 8403(1). 

237Chamber, FTC–2023–0033–0885. 

238 16 CFR 310.2(t) (TSR); 16 CFR 461.1 

(Impersonation Rule); Policy Statement on 

Deception (Oct. 14, 1983) (appended to In re 

Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984)). See 

also BSA, FTC–2023–0033–1015 (requesting 

definition of material consistent with TSR and 

Policy Statement); Chamber, FTC–2023–0033–0885 

(criticizing the proposed Rule for not defining 

materiality). 

239E.g., ESA, FTC–2023–0033–0867; NFIB, FTC– 

2023–0033–0789; TechFreedom, FTC–2023–0033– 

0872. 

240 15 U.S.C. 8401(2). 

241 IAB, FTC–2023–0033–1000. 

242TechNet, FTC–2023–0033–0869. 

243Policy Statement on Deception (Oct. 14, 1983) 

(appended to In re Cliffdale Assocs., Inc., 103 F.T.C. 

110 (1984)) (describing and citing materiality of 

purpose, safety, efficacy, and cost); In re Thompson 

Medical Co., Inc., 104 F.T.C. 648, 816–17 (1984) 

(listing cost, purpose, efficacy, and safety as 

presumptively material characteristics). 

244 In the negative option context, material cost 

misrepresentations may include any cost (and total 

Continued 

under consideration by the 

Commission.’’ 232 The ANPR in this case 

meets this standard. Specifically, in the 

ANPR, the Commission stated the 

objective of the Rule was to prevent 

deceptive or unfair practices in the 

marketing of products and services with 

negative option features. Several 

industry associations submitted 

comments in response to the ANPR, 

illustrating the effectiveness of the 

ANPR in soliciting views of the 

interested public and affected industry 

before issuing the NPRM.233 Moreover, 

as detailed herein, the Commission has 

reviewed and carefully considered the 

views of the public and industry as 

expressed in response to both the ANPR 

and NPRM. 

The record demonstrates 

misrepresentations made to induce 

consumers to enter into negative option 

programs are prevalent. Specifically, the 

Commission’s enforcement experience 

(including consumer complaints, 

matters cited in the NPRM, and matters 

cited in this Statement of Basis and 

Purpose) as well as the experiences of 

the State AGs, the information cited by 

the Law Professors, and comments by 

consumer commenters all support this 

conclusion.234

As several commenters critical of the 

proposed provision correctly note, 

misrepresentations to induce consumers 

to join negative option programs are 

already unlawful under section 5, as 

well as under other State and Federal 

laws and regulations, depending on 

(among other things) media used and 

jurisdiction. This fact, however, does 

not undermine the need for the Rule 

provision. By definition, a section 18 

trade regulation rule addresses conduct 

that is already prohibited under section 

5. With such prohibited conduct 

defined, the trade regulation rule may 

also more broadly ‘‘include 

requirements prescribed for the purpose 

of preventing such acts or practices,’’ 

but the core of a trade regulation rule is 

the description of acts or practices 

already violative of section 5.235 The 

misrepresentations section of the Rule is 

narrower than the full scope of tools 

available under section 18. It simply 

prohibits conduct that is already 

deceptive. Such a provision promotes 

clarity and confidence in the 

marketplace and provides for more 

effective remedies (i.e., civil penalties, 

where appropriate) against wrongdoers. 

Moreover, the fact that ROSCA’s 

disclosure requirement 236 already 

essentially prohibits material 

misrepresentations about online 

negative option transactions, means 

much of the rhetoric predicting the 

downfall of negative option marketing 

simply is ill-founded. Indeed, the 

Chamber pointed to the ‘‘clear 

popularity and use of negative option 

features across the economy’’ even as 

ROSCA has been law for over a 

decade.237 Far from undermining 

legitimate business, the Rule’s express 

prohibition on misrepresenting material 

facts in connection with promoting or 

offering for sale a negative option 

feature should increase consumer 

confidence in negative option 

marketing, thus making it easier for 

legitimate businesses to market their 

products. 

(2) Prohibiting misrepresentation of 

any material facts, not just those 

pertaining to the negative option 

feature, promotes clarity consistent with 

ROSCA and Commission precedent. 

The final Rule prohibits 

misrepresentation of ‘‘any material 

fact.’’ In doing so, it provides a nonexhaustive list of categories of 

potentially material facts (including 

transaction terms) and adds a definition 

of ‘‘material,’’ consistent with section 5 

and the TSR. Specifically, consistent 

with section 5, ‘‘material’’ means ‘‘likely 

to affect a person’s choice of, or conduct 

regarding, goods or services.’’ 238 This 

approach both clarifies the terms most 

at issue and ensures the Rule accords 

with longstanding section 5 precedent. 

The Commission declines to limit the 

misrepresentations prohibition solely to 

elements of the negative option 

feature.239 First, the Commission finds 

imposing such a narrow restriction 

would be inconsistent with existing 

protections. Pursuant to ROSCA section 

8403, sellers must ‘‘clearly and 

conspicuously disclose all material 

terms of the transaction before obtaining 

the consumer’s billing information.’’ As 

Congress has explained, a healthy 

marketplace ‘‘must provide consumers 

with clear, accurate information and 

give sellers an opportunity to fairly 

compete with one another for 

consumers’ business.’’ 240 Limiting a 

misrepresentations prohibition solely to 

misrepresentations about the negative 

option feature itself would fall well 

short of the scope of ROSCA and the 

Commission’s responsibility to protect 

the public. 

Moreover, seller commenters 

themselves highlighted transaction 

elements other than negative option 

terms as critical to inducing consumers 

to choose negative option features. IAB, 

for example, pointed to the promise of 

‘‘broader selection and lower prices’’ or 

‘‘convenience and savings.’’ 241

Similarly, TechNet identified the 

‘‘ability to provide financial savings, 

convenience, and access to premium 

services’’ as ‘‘the main drivers’’ of 

varied subscriptions.242

Furthermore, such a distinction may 

invite dishonest actors to misrepresent 

material facts about a transaction so 

long as they felt they could evade 

monetary liability for such 

misrepresentations. Moreover, simply 

refraining from making material 

misrepresentations is hardly a 

significant burden given the fact that 

such misrepresentations are already 

illegal under section 5 of the FTC Act, 

and subject to civil penalties when 

made on the internet and over the 

telephone pursuant to ROSCA and the 

TSR, respectively. 

(3) The Commission declines to 

exclude any material facts from the 

scope of the provision. 

To further promote clarity, the 

Commission includes a list of nonexclusive examples in the text of 

§ 425.3. In addition to the negative 

option feature itself, the examples 

include certain characteristics the 

Commission has identified as 

presumptively material for more than 40 

years 243 and which have in fact 

appeared as the subject of material 

misrepresentations in Commission 

negative option cases—cost,244 purpose 


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costs) from inception through the course of the 

commercial relationship, including 

misrepresentations as to recurring costs and refunds 

or guarantees. See, e.g., FTC v. FloatMe Corp., No. 

5:24–cv–00001 (W.D. Tex. 2024); United States v. 

Cerebral, Inc., No. 1:24–cv–21376 (S.D. Fla. 2024); 

FTC v. Bridge It, Inc., No. 1:23–cv–09651 (S.D.N.Y. 

2023); FTC v. Benefytt Techs., Inc., No. 8:22–cv– 

01794 (M.D. Fla. 2022); FTC v. First Am. Payment 

Sys., No. 4:22–cv–00654 (E.D. Tex. 2022); FTC v. 

XXL Impressions, LLC, No. 1:17–cv–00067 (D. Me. 

2017); FTC v. Cardiff, No. 5:18–cv–02104 (C.D. Cal. 

2018); FTC v. Health Rsch. Labs., LLC, No. 2:17–cv– 

00467 (D. Me. 2017); FTC v. Tarr, No. 3:17–cv– 

02024 (S.D. Cal. 2017); FTC v. AdoreMe, Inc., No. 

1:17–cv–09083 (S.D.N.Y. 2017); FTC v. Pact, Inc., 

No. 2:17–cv–1429 (W.D. Wash. 2017); FTC v. 

Leanspa, LLC, No. 3:11–cv–01715 (D. Conn. 2011); 

FTC v. Willms, No. 2:11–cv–00828 (W.D. Wash. 

2011); FTC v. Universal Premium Servs., No. 2:06– 

cv–00849 (C.D. Cal. 2006). 

245See, e.g., FTC v. FloatMe Corp., No. 5:24–cv– 

00001 (W.D. Tex. 2024); United States v. Cerebral, 

Inc., No. 1:24–cv–21376 (S.D. Fla. 2024); FTC v. 

NGL Labs, LLC, No. 2:24–cv–05753 (C.D. Cal. 2024); 

FTC v. Bridge It, Inc., No. 1:23–cv–09651 (S.D.N.Y. 

2023); FTC v. WealthPress, Inc., No. 3:23–cv–00046 

(M.D. Fla. 2023); In re Dun & Bradstreet, Inc., FTC 

Docket No. C–4761 (2022); FTC v. First Am. 

Payment Sys., No. 4:22–cv–00654 (E.D. Tex. 2022); 

In re MoviePass, Inc., FTC Docket No. C–4751 

(2021); United States v. MyLife.com, Inc., No. 2:20– 

cv–6692 (C.D. Cal. 2020); FTC v. RagingBull.com, 

LLC, No. 1:20–cv–03538 (D. Md. 2020); FTC v. 

Match Grp., Inc., No. 3:19–cv–02281 (N.D. Tex. 

2019); FTC v. XXL Impressions, LLC, No. 1:17–cv– 

00067 (D. Me. 2017); FTC v. Cardiff, No. 5:18–cv– 

02104 (C.D. Cal. 2018); FTC v. JDI Dating, Ltd., No. 

1:14–cv–08400 (N.D. Ill. 2014); FTC v. Credit 

Bureau Ctr., LLC, No. 1:17–cv–00194 (N.D. Ill. 

2017); FTC v. Health Rsch. Labs., LLC, No. 2:17–cv– 

00467 (D. Me. 2017); FTC v. Health Formulas, LLC, 

No. 2:14–cv–01649 (D. Nev. 2014); FTC v. Leanspa, 

LLC, No. 3:11–cv–01715 (D. Conn. 2011); FTC v. 

Willms, No. 2:11–cv–00828 (W.D. Wash. 2011); FTC 

v. Johnson, No. 2:10–cv–02203 (D. Nev. 2010); FTC 

v. Remote Response Corp., No. 1:06–cv–20168 (S.D. 

Fla. 2006). 

246See, e.g., FTC v. XXL Impressions, LLC, No. 

1:17–cv–00067 (D. Me. 2017); FTC v. Cardiff, No. 

5:18–cv–02104 (C.D. Cal. 2018); FTC v. Health 

Rsch. Labs., LLC, No. 2:17–cv–00467 (D. Me. 2017); 

FTC v. Health Formulas, LLC, No. 2:14–cv–01649 

(D. Nev. 2014); FTC v. Leanspa, LLC, No. 3:11–cv– 

01715 (D. Conn. 2011); FTC v. Willms, No. 2:11–cv– 

00828 (W.D. Wash. 2011). 

247E.g., FTC v. Elite IT Partners, Inc., No. 2:19– 

cv–00125 (D. Utah 2019) (affiliation with wellknown companies); In re Urthbox, Inc., FTC Docket 

No. C–4676 (2019) (independence of reviews); FTC 

v. BunZai Media Grp., Inc., No. 2:15–cv–04527 

(C.D. Cal. 2015) (BBB accreditation and ratings); 

FTC v. DOTAuthority.com, Inc., No. 0:16–cv–62186 

(S.D. Fla. 2016) (ratings); FTC v. FTN Promotions, 

Inc., No. 8:07–cv–1279 (M.D. Fla. 2007) (affiliation 

with consumer’s bank). 

248E.g., FTC v. XXL Impressions, LLC, No. 1:17– 

cv–00067 (D. Me. 2017) (radio news show); FTC v. 

Leanspa, LLC, No. 3:11–cv–01715 (D. Conn. 2011) 

(news reports). 

249E.g., In re Dun & Bradstreet, Inc., FTC Docket 

No. C–4761 (2022) (charging for same product 

consumer previously purchased); FTC v. Benefytt 

Techs., Inc., No. 8:22–cv–01794 (M.D. Fla. 2022) 

(charging for authorized products); FTC v. Triangle 

Media Corp., No. 3:18–cv–01388 (S.D. Cal. 2018) 

(completeness of order); FTC v. Apex Capital Grp., 

LLC, No. 2:18–cv–09573 (C.D. Cal. 2018) 

(completeness of order); FTC v. Moneymaker, No. 

2:11–cv–00461 (D. Nev. 2011) (purpose of 

authorization). 

250E.g., United States v. Cerebral, Inc., No. 1:24– 

cv–21376 (S.D. Fla. 2024) (data security and 

privacy); In re MoviePass, Inc., FTC Docket No. C– 

4751 (2021) (data security). 

251E.g., FTC v. XXL Impressions, LLC, No. 1:17– 

cv–00067 (D. Me. 2017); FTC v. Cardiff, No. 5:18– 

cv–02104 (C.D. Cal. 2018); FTC v. Willms, No. 2:11– 

cv–00828 (W.D. Wash. 2011). 

252 15 U.S.C. 57a(a)(1)(B). 

253PDMI, FTC–2023–003–0864 (contrasting the 

proposed Rule language with Business Opportunity 

Rule language, saying ‘‘The Business Opportunity 

Rule does not prohibit any misrepresentation in 

connection with business opportunities. It prohibits 

specific misrepresentations about earnings 

claims.’’); TechFreedom, FTC–2023–0033–0872 

(‘‘For example, the Business Opportunity Rule 

prohibits no fewer than 21 different kinds of 

misrepresentation regarding business opportunities. 

This specificity is typical of trade regulation 

rules.’’) (footnotes omitted). 

254 15 U.S.C. 57a(a)(1)(B). 

255 16 CFR 437.6(i). 

256See, e.g., FTC v. FloatMe Corp., No. 5:24–cv– 

00001 (W.D. Tex. 2024); United States v. Cerebral, 

Inc., No. 1:24–cv–21376 (S.D. Fla. 2024); FTC v. 

NGL Labs, LLC, No. 2:24–cv–05753 (C.D. Cal. 2024); 

FTC v. Bridge It, Inc., No. 1:23–cv–09651 (S.D.N.Y. 

2023); FTC v. WealthPress, Inc., No. 3:23–cv–00046 

(M.D. Fla. 2023); FTC v. Benefytt Techs., Inc., No. 

8:22–cv–01794 (M.D. Fla. 2022); In re Dun & 

Bradstreet, Inc., FTC Docket No. C–4761 (2022); 

FTC v. First Am. Payment Sys., No. 4:22–cv–00654 

(E.D. Tex. 2022); In re MoviePass, Inc., FTC Docket 

No. C–4751 (2021); United States v. MyLife.com, 

Inc., No. 2:20–cv–6692 (C.D. Cal. 2020); FTC v. 

RagingBull.com, LLC, No. 1:20–cv–03538 (D. Md. 

2020); FTC v. Match Grp., Inc., No. 3:19–cv–02281 

(N.D. Tex. 2019); FTC v. Elite IT Partners, Inc., No. 

2:19–cv–00125 (D. Utah 2019); In re Urthbox, Inc., 

FTC Docket No. C–4676 (2019); FTC v. Triangle 

Media Corp., No. 3:18–cv–01388 (S.D. Cal. 2018); 

FTC v. Apex Capital Grp., LLC, No. 2:18–cv–09573 

(C.D. Cal. 2018); FTC v. XXL Impressions, LLC, No. 

1:17–cv–00067 (D. Me. 2017); FTC v. Cardiff, No. 

5:18–cv–02104 (C.D. Cal. 2018); FTC v. JDI Dating, 

Ltd., No. 1:14–cv–08400 (N.D. Ill. 2014); FTC v. 

Credit Bureau Ctr., LLC, No. 1:17–cv–00194 (N.D. 

Ill. 2017); FTC v. BunZai Media Grp., Inc., No. 2:15– 

cv–04527 (C.D. Cal. 2015); FTC v. 

DOTAuthority.com, Inc., No. 0:16–cv–62186 (S.D. 

Fla. 2016); FTC v. Health Rsch. Labs., LLC, No. 

2:17–cv–00467 (D. Me. 2017); FTC v. Tarr, No. 

3:17–cv–02024 (S.D. Cal. 2017); FTC v. AdoreMe, 

Inc., No. 1:17–cv–09083 (S.D.N.Y. 2017); FTC v. 

Pact, Inc., No. 2:17–cv–1429 (W.D. Wash. 2017); 

FTC v. RevMountain, LLC, No. 2:17–cv–02000 (D. 

Nev. 2017); FTC v. AAFE Prods. Corp., No. 3:17– 

cv–00575 (S.D. Cal. 2017); FTC v. Health Formulas, 

LLC, No. 2:14–cv–01649 (D. Nev. 2014); FTC v. Dill, 

No. 2:16–cv–00023 (D. Me. 2016); FTC v. Leanspa, 

LLC, No. 3:11–cv–01715 (D. Conn. 2011); FTC v. 

Willms, No. 2:11–cv–00828 (W.D. Wash. 2011); FTC 

v. Moneymaker, No. 2:11–cv–00461 (D. Nev. 2011); 

FTC v. Johnson, No. 2:10–cv–02203 (D. Nev. 2010); 

FTC v. Inc21.com Corp., 745 F. Supp. 2d 975 (N.D. 

Cal. 2010); FTC v. JAB Ventures, LLC, No. 2:08–cv– 

04648 (C.D. Cal. 2008); FTC v. Ultralife Fitness, Inc., 

No. 2:08–cv–07655 (C.D. Cal. 2008); FTC v. FTN 

Promotions, Inc., No. 8:07–cv–1279 (M.D. Fla. 

2007); FTC v. Think All Publ’g, LLC, No. 4:07–cv– 

00011 (E.D. Tex. 2007); FTC v HispaNexo, Inc., No. 

1:06–cv–424 (E.D. Va. 2006); FTC v. Universal 

Premium Servs., No. 2:06–cv–00849 (C.D. Cal. 

or efficacy,245 and health or safety.246

The record demonstrates the list must 

be non-exclusive because the 

Commission has observed the use of 

material misrepresentations other than 

those enumerated to induce consumers 

to enter into transactions with negative 

option features, including, for example, 

characteristics of the seller,247 the 

format of the ad or other sales 

communication,248 consumer 

authorization,249 consumer privacy or 

data security,250 and endorsements or 

testimonials.251 The Commission cannot 

predict what other material 

misrepresentations dishonest actors may 

employ in the future. 

Some commenters asserted section 18 

does not authorize the Commission to 

prohibit material misrepresentations in 

a given area of commerce. Section 18, 

however, permits the FTC to promulgate 

‘‘rules which define with specificity acts 

or practices which are unfair or 

deceptive acts or practices in or 

affecting commerce (within the meaning 

of [section 5(a)(1)]) . . . [and] may 

include requirements prescribed for the 

purpose of preventing such acts or 

practices.’’ 252 It places no additional 

restrictions on the scope of this 

rulemaking. 

Several commenters appear to think 

section 18 requires the Commission to 

define specific claims as deceptive; for 

example, two commenters cited the 

Business Opportunity Rule’s treatment 

of misrepresentations.253 While the 

cited Rules show one way to meet the 

statute’s specificity requirements, the 

statute does not require the Commission 

to define claims with specificity, but 

instead acts or practices.254 For 

example, in the Business Opportunity 

Rule, the practice of misrepresenting 

‘‘any material aspect of any assistance 

offered to a prospective purchaser’’ in a 

business opportunity transaction is a 

specific type of deceptive practice in or 

affecting commerce.255 By the same 

token, the practice of misrepresenting 

material facts to induce consumers to 

consent to negative option features 

constitutes a specific type of deceptive 

practice. 

The record, including the submissions 

of many industry commenters, shows 

negative option features are found 

across industries, but are consistently 

distinguishable as a subset of general 

commercial practices. As commenters 

point out, negative option features offer 

many distinct benefits to consumers and 

sellers. These benefits do not lose their 

distinct character merely because they 

occur across different kinds of goods 

and services sold across different 

channels. While the record shows this 

practice offers distinct benefits, it also 

shows the practice is plagued by 

distinct abuse. This is not a hypothetical 

statement; the Commission is not 

promulgating the final Rule because 

negative option features may engender 

deception, whether relating to the 

feature itself or to other material facts, 

but rather because the record shows 

they have.256 Just as with the benefits of 


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2006); FTC v. Remote Response Corp., No. 1:06–cv– 

20168 (S.D. Fla. 2006). 

257Policy Statement on Deception (Oct. 14, 1983) 

(appended to In re Cliffdale Assocs., Inc., 103 F.T.C. 

110 (1984)). 

258See n.257. 

259 16 CFR 310.2(t); In re Cliffdale Assocs., Inc., 

103 F.T.C. 110 (1984). 

260See FTC v. Direct Mktg. Concepts, Inc., 624 

F.3d 1, 11 (1st Cir. 2010) (‘‘Where a claim is merely 

‘exaggerated advertising, blustering, and boasting 

upon which no reasonable buyer would rely,’ it 

may be un-actionable puffery.’’). 

261The Commission declines to add language 

defining a ‘‘reasonable person standard’’ as 

suggested by RILA, and refers instead to the 

discussion of reasonableness set forth in the 

Commission’s Policy Statement on Deception (Oct. 

14, 1983) (appended to In re Cliffdale Assocs., Inc., 

103 F.T.C. 110 (1984)). 

262NPRM, 88 FR 24727. 

263NPRM, 88 FR 24726–27. 

264NPRM, 88 FR 24726. 

265NPRM, 88 FR 24727. 

negative option marketing, these 

problems do not lose their distinct 

character, in other words they are 

distinct practices, even though they 

appear in a variety of contexts. 

In addressing this deceptive practice, 

the Commission remains guided by core 

principles articulated in its 1983 

Deception Policy Statement. As the 

Commission explained, in considering 

whether to act against a deceptive 

practice, the Commission will observe 

the extent to which consumers 

themselves have been able to police and 

generate consequences for seller 

deception. 

Finally, as a matter of policy, when 

consumers can easily evaluate the product or 

service, it is inexpensive, and it is frequently 

purchased, the Commission will examine the 

practice closely before issuing a complaint 

based on deception. There is little incentive 

for sellers to misrepresent (either by an 

explicit false statement or a deliberate false 

implied statement) in these circumstances 

since they normally would seek to encourage 

repeat purchases. Where, as here, market 

incentives place strong constraints on the 

likelihood of deception, the Commission will 

examine a practice closely before 

proceeding.257

The record shows the practice of 

misrepresenting material facts to induce 

consent to negative option features has 

created distinct issues consumers have 

not been able to address themselves, 

enabling sellers to collect numerous 

recurring payments before consumers 

detect the misrepresentation and act to 

stop the charges. This problem is not 

confined to a particular subset of 

industries or misrepresentations but 

instead is a too-frequent practice 

throughout negative option 

marketing.258 Specifically, when a 

consumer makes a series of purchases 

from the same seller in ordinary 

circumstances (rather than through a 

negative option), each purchase requires 

the consumer to actively, even if only 

briefly, re-evaluate the transaction and 

affirmatively consent. Dishonest 

negative option sellers too easily bypass 

these typical guardrails of ‘‘repeat 

purchases.’’ Thus, up-front 

misrepresentations can induce 

consumers into recurring transactions 

lacking ordinary sales’ built-in 

interruptions for re-evaluation and 

renewed consent. As with other areas 

where consumers have limited 

opportunities for critical up-front 

evaluation (for example, consumers 

cannot easily evaluate medical claims 

about dietary supplements), so too, here, 

the Commission finds additional 

protection warranted. 

The Commission has considered 

commenters’ section 18 specificity 

concerns pertaining to material 

misrepresentations and finds them 

unsupported by the record. These 

commenters suggest a hypothetical 

world where negative option features 

provide distinguishable commercial 

benefits without presenting 

distinguishable material 

misrepresentation challenges. The 

reality is otherwise. Thus, the final Rule 

prohibits the specific practice of sellers 

misrepresenting material terms or facts 

in connection with negative option 

sales. 

(4) For clarity, the final Rule adds a 

definition of ‘‘material’’ consistent with 

precedent. 

As noted above, and as suggested by 

commenters, the Commission defines 

‘‘material’’ in the final Rule. This 

definition adds clarity and addresses the 

rhetorical questions raised by 

commenters regarding scope. 

Specifically, consistent with section 5, 

the TSR, and longstanding Commission 

policy and case law, the final Rule 

defines the term to mean likely to affect 

a person’s choice of, or conduct 

regarding, goods or services.259 Thus, 

mere puffery is not material.260

The hypotheticals posed by MIA— 

‘‘movies that you will love’’ or ‘‘great 

cleaning every time’’—are classic 

examples of puffery, and thus, are not 

within the scope of materiality.261 The 

response to the question posed by the 

Chamber—whether misrepresentation of 

a privacy policy would be covered— 

depends, as it always has, on whether 

the seller misrepresents its privacy 

policy in a way likely to affect consumer 

choice or conduct. 

4. Proposed § 425.4 Important 

Information 

Section 425.4 of the proposed Rule 

prohibited sellers from failing to 

disclose ‘‘any material conditions 

related to the underlying product or 

service that is necessary to prevent 

deception, regardless of whether that 

term directly relates to the terms of the 

negative option offer.’’ 262 As explained 

in the NPRM, the Commission drafted 

this provision because ‘‘many sellers fail 

to provide adequate disclosures, thereby 

luring consumers into purchasing goods 

or services they do not want.’’ 263 To 

address this issue, the proposed Rule 

required sellers to provide the following 

important information prior to obtaining 

a consumer’s billing information: ‘‘(1) 

that consumers’ payments will be 

recurring, if applicable; (2) the deadline 

by which consumers must act to stop 

charges; (3) the amount or ranges of 

costs consumers may incur; (4) the date 

the charge will be submitted for 

payment; and (5) information about the 

mechanism consumers may use to 

cancel the recurring payments.’’ 264

The Commission also proposed 

requirements regarding the form and 

location of this important information, 

as its ‘‘law enforcement experience and 

consumer complaints are replete with 

examples of hidden disclosures, 

including those in fine print, buried in 

paragraphs of legalese and sales pitches, 

and accessible only through 

hyperlinks.’’ 265 Thus, under the 

proposed Rule, information ‘‘directly 

related to the negative option feature 

. . . must appear immediately adjacent 

to the means of recording the 

consumer’s consent for the negative 

option feature.’’ Information ‘‘not 

directly related to the negative option 

feature . . . must appear before 

consumers make a decision to buy (e.g., 

before they ‘add to shopping cart’).’’ 

Further, the proposal stated all 

disclosures must be clear and 

conspicuous as defined in § 425.2(c). 

Among other elements of the clear and 

conspicuous definition, the proposed 

Rule specified that in any 

communication using an interactive 

electronic medium, such as the internet, 

mobile application, or software, the 

disclosure must be unavoidable. The 

proposed Rule also specified that a 

disclosure is not clear and conspicuous 

if a consumer ‘‘must take any action, 

such as clicking on a hyperlink or 

hovering over an icon, to see it.’’ 

Finally, the proposed Rule prohibited 

sellers from including any information 

that interferes with, detracts from, 

contradicts, or otherwise undermines 

the ability of consumers to read, hear, 

see, or otherwise understand the 

required disclosures. The final clause of 

this prohibition ‘‘includ[ed] any 


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266NPRM, 88 FR 24727. 

267Thousands of consumers submitted the 

following identical comment in their own names: 

‘‘It’s critically important that companies make it 

explicitly clear what consumers are signing up for 

and to make canceling fast and easy. If you signed 

up online, you should be able to cancel online. If 

it took one click to join, it should take one click 

to cancel. Implementing this consumer protection 

rule has the potential to save American consumers 

millions of dollars and I hope it is implemented as 

soon as possible.’’ While apparently a response to 

a mass solicitation, many consumers further 

personalized their submission by adding their 

unique experiences and desire for the Rule. See, 

e.g., Individual commenter, FTC–2023–0033–0161; 

–0163; –0164; 0198; –0204; –0545; 0658. 

268 Individual commenter, FTC–2023–0033–0268. 

Similarly, another individual commenter said, 

‘‘Businesses should not present agreements in tiny 

print on an agent’s tablet for the customer to sign. 

I can’t read the print.’’ Individual commenter, FTC– 

2023–0033–0349. 

269 Individual commenter, FTC–2023–0033–0345. 

270 Individual commenter, FTC–2023–0033–0781. 

271 Individual commenter, FTC–2023–0033–0031. 

Accord Individual commenter, 0196 (‘‘I have had to 

get to the point of not subscribing to any online 

offers, as far too many times I have found it nearly 

impossible to unsubscribe’’); Individual commenter, 

FTC–2023–0033–0306 (‘‘you could win over more 

subscribers to your services if you took away the 

fear and doubts of the public that they will probably 

be hooked into something that would be more 

troublesome to get out of . . . I can tell you that 

I have passed over many opportunities that I was 

interested in for this very reason.’’); Individual 

commenter, FTC–2023–0033–0333 (‘‘I’ve had some 

difficulty in the past cancelling enrollments or 

subscriptions, so that now I’ve become very wary 

of products or services I would otherwise 

appreciate having. Implementing this consumer 

protection rule would help me feel more confident 

again.’’). 

272Berkeley Consumer Law Center, FTC–2023– 

0033–0855. Similarly, for the same reasons they 

provided in connection with the misrepresentations 

provision, the Law Professors encouraged the 

Commission to maintain the proposed disclosure 

provision’s coverage of material terms necessary to 

prevent deception, regardless of whether such terms 

are exclusively about the negative option feature. 

Law Professors, FTC–2023–0033–0861. 

273Public Interest Groups, FTC–2023–0033–0880. 

274State AGs, FTC–2023–0033–0886. 

275 Id. 

276CART, FTC–2023–0033–0698. 

277 Id. 

278Not all industry groups criticized the 

provision. Specifically, MIA wrote, ‘‘The 

Association agrees with the important information 

requirement under the proposed Rule.’’ MIA, FTC– 

2023–0033–1008. 

279 In addition, some commenters cited industryspecific laws and regulations pertaining to 

disclosures as rendering the proposed provision 

unnecessary or counterproductive. ACA ConnectsAmerica’s Communications Association (‘‘ACA’’), 

FTC–2023–0033–0881; NCTA, FTC–2023–0033– 

0858; SFE, FTC–2023–0033–1151; USTelecom, 

FTC–2023–0033–0876. 

280ANA, FTC–2023–0033–1001; CCIA, FTC– 

2023–0033–0984; Coalition, FTC–2023–0033–0884; 

ESA, FTC–2023–0033–0867; IAB, FTC–2023–0033– 

1000; NCTA, FTC–2023–0033–0858; Chamber, 

FTC–2023–0033–0885. NFIB suggested the 

Commission strike the provision ‘‘The disclosure 

must use diction and syntax understandable to 

ordinary consumers’’ and replace it with ‘‘ ‘The 

disclosure must use words and grammar that 

ordinary consumers would likely understand.’ ’’ 

FTC–2023–0033–0789. 

281ACT App Association, FTC–2023–0033–0874; 

ANA, FTC–2023–0033–1001; BSA, FTC–2023– 

0033–1015; CCIA, FTC–2023–0033–0984; NCTA, 

FTC–2023–0033–0858; NFIB, FTC–2023–0033– 

0789; NRF, FTC–2023–0033–1005; PDMI, FTC– 

2023–003–0864; Sirius XM, FTC–2023–0033–0857; 

Chamber, FTC–2023–0033–0885. 

information not directly related to the 

material terms and conditions of any 

negative option feature.’’ 

Through these provisions, the 

Commission sought to prevent 

deception by businesses taking 

advantage of the gray areas in current 

law, to deter fraudulent actors through 

the possibility of monetary relief, and to 

‘‘level the playing field for legitimate 

businesses, freeing them from having to 

compete against those employing 

deception.’’ 266

(a) Summary of Comments 

Thousands of commenters supported 

the important information requirement, 

stating it is ‘‘critically important that 

companies make it explicitly clear what 

consumers are signing up for.’’ 267

Consumers identified problematic 

practices the provision would address, 

including insufficient and unclear 

disclosures in small print or those 

appearing too late in the transaction. For 

example, an individual commenter said, 

‘‘[t]oo many [sellers] hide these details 

in extra fine print, and increasingly text 

is in a very light gray color, making it 

even harder to read.’’ 268 Another 

individual commenter noted, ‘‘I ordered 

skin care from a tv infomercial only to 

find out it was a subscription thing 

though none of this was disclosed by 

famous actresses on the 

promotion. . . . I went back to my 

receipt of what I originally ordered and 

in fine print saw that I had been 

duped!’’ 269

Several individual commenters 

indicated clear upfront disclosures 

would help them make informed 

choices and improve their willingness 

to try negative option offerings, 

particularly if the disclosure provided 

an easy cancellation mechanism. As one 

put it, ‘‘I am much more like[ly] to try— 

and buy—a new service if I know there 

is an easy way to cancel online.’’ 270

Another said, ‘‘I actually subscribe to far 

fewer services than I would if I knew 

that I could easily cancel once I had 

tried a sample.’’ 271

Public advocacy commenters also 

supported the provision. The Berkeley 

Consumer Law Center said, ‘‘the 

requirement of ‘clear and conspicuous’ 

disclosures of ‘any material term related 

to the underlying goods or services that 

is necessary to prevent deception’ will 

help prevent cancellation terms from 

being shrouded in mystery through 

complicated terms and conditions, 

while also blocking the practice of 

hiding subscription services that are 

needed to fully use a product.’’ 272

Similarly, a coalition of consumer and 

public interest advocacy organizations 

asserted the proposed disclosure 

requirement ‘‘will clearly inform 

consumers of the terms of the contract 

and how they may terminate the 

agreement.’’ 273

Law enforcement commenters 

likewise supported the important 

information requirements. The State 

AGs said they would ‘‘repel the abusive 

practices of hidden disclosures, 

‘including those in fine print, buried in 

paragraphs of legalese and sales pitches, 

and accessible only through 

hyperlinks.’ ’’ 274 They particularly 

emphasized their support for ‘‘the 

required disclosure of ‘the information 

necessary for the consumer to cancel the 

negative option feature.’ ’’ 275 The 

California Auto-Renew Task Force 

(‘‘CART’’), a group of Southern 

California prosecutors, supported 

disclosures appearing ‘‘immediately 

adjacent to the means of recording the 

consumer’s consent for the negative 

option feature.’’ 276 CART asserted this 

provision, together with others, ‘‘will 

greatly minimize consumer deception 

and ensure that consumers fully 

understand—and agree to—the nature of 

the transaction under consideration.’’ 277

Other commenters, mostly industry 

groups,278 expressed several concerns 

with the proposed requirements, 

specifically with the definition of ‘‘clear 

and conspicuous,’’ the scope and timing 

of the material terms to be disclosed, 

specific disclosure requirements, 

placement, and treatment of other 

information.279

Multiple commenters claimed the 

requirement that disclosures using an 

interactive electronic medium must be 

‘‘unavoidable’’ would be unworkable 

given the additional provision that a 

‘‘disclosure is not clear and conspicuous 

if a consumer must take any action, 

such as clicking on a hyperlink or 

hovering over an icon, to see it.’’ 280

Commenters noted it would be difficult 

or impossible to implement this 

requirement on small screens (such as 

mobile phones), and it may reduce 

rather than improve clarity. 

Several commenters also objected to 

the requirement sellers disclose material 

terms other than those pertaining 

exclusively to the negative option 

feature, asserting this would be 

overbroad.281 Additionally, commenters 

questioned how the Commission would 

enforce a requirement to disclose 

material terms before obtaining a 


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282CTA, FTC–2023–0033–0997; ESA, FTC–2023– 

0033–0867; IAB, FTC–2023–0033–1000; NRF, FTC– 

2023–0033–1005; RILA, FTC–2023–0033–0883. 

Sirius XM asserted this requirement could be 

interpreted to mean every advertisement must 

contain disclosure of all material terms. FTC–2023– 

0033–0857. 

283Rebecca Kuehn (‘‘Kuehn’’), FTC–2023–0033– 

0871; NRF, FTC–2023–0033–1005. 

284CCIA, FTC–2023–0033–0984; CTA, FTC– 

2023–0033–0997; ESA, FTC–2023–0033–0867; IAB, 

FTC–2023–0033–1000; NRF, FTC–2023–0033–1005; 

RILA, FTC–2023–0033–0883; Sirius XM, FTC– 

2023–0033–0857. 

285 IAB, FTC–2023–0033–1000 (deadlines); 

Comment from Kelley Drye & Warren LLP on behalf 

of certain direct marketing companies (‘‘Direct 

Marketing Companies’’), FTC–2023–0033–1016 

(deadlines); NRF, FTC–2023–0033–1005 (amount or 

range of costs); Sirius XM, FTC–2023–0033–0857 

(amount or range of costs). 

286 Direct Marketing Companies, FTC–2023– 

0033–1016. 

287CCIA, FTC–2023–0033–0984; ESA, FTC– 

2023–0033–0867; IAB, FTC–2023–0033–1000; NRF, 

FTC–2023–0033–1005. 

288 IAB, FTC–2023–0033–1000. 

289ANA, FTC–2023–0033–1001; CCIA, FTC– 

2023–0033–0984; Coalition, FTC–2023–0033–0884; 

CTA, FTC–2023–0033–0997; ESA, FTC–2023– 

0033–0867; IAB, FTC–2023–0033–1000; Direct 

Marketing Companies, FTC–2023–0033–1016; NRF, 

FTC–2023–0033–1005; SFE, FTC–2023–0033–1151; 

Sirius XM, FTC–2023–0033–0857; Chamber, FTC– 

2023–0033–0885. 

290 Individual commenter, FTC–2023–0033–0552. 

291NRF, FTC–2023–0033–1005. 

292Coalition, FTC–2023–0033–0884; Chamber, 

FTC–2023–0033–0885. 

293NRF, FTC–2023–0033–1005 (emphasis in 

comment); see also Chamber, FTC–2023–0033–0885 

(‘‘[T]he [disclosure] requirement is also ambiguous 

considering it does not clearly outline the specific 

material terms that need to be disclosed, which is 

particularly important considering the requirement 

applies not just to the negative option feature, but 

all terms in the transaction.’’). 

294State AGs, FTC–2023–0033–0886. 

295See., e.g., In re MoviePass, Inc., FTC Docket 

No. C–4751 (2021). 

296 15 U.S.C. 57a(a)(1)(B). 

297Additionally, the Commission changes ‘‘any’’ 

to ‘‘all’’ material terms, and deletes the phrase 

‘‘related to the underlying good or service that is 

necessary to prevent deception’’ for clarity. 

Specifically, the Commission makes clear that 

sellers are required to disclose all material terms, 

consistent with the requirements of ROSCA. 

298See In re Cliffdale Associates, Inc., 103 F.T.C. 

110, 165 (1984) (misleading impression created by 

a solicitation is material if it ‘‘involves information 

that is important to consumers and, hence, likely 

Continued 

consumer’s billing information, 

especially where a consumer previously 

elected to save billing information with 

the seller.282 Commenters also found the 

requirement that material terms ‘‘not 

directly related to the negative option 

feature . . . must appear before 

consumers make a decision to buy’’ to 

be vague.283

Several commenters took issue with 

the five specific disclosures in the 

proposed Rule. For example, the 

requirement to disclose ‘‘the date (or 

dates) each charge will be submitted for 

payment’’ drew substantial criticism, 

with several commenters asserting 

appropriate disclosures regarding 

frequency should suffice.284

Commenters also criticized the 

requirements to disclose deadlines to 

act and the amount or range of costs.285

A group of direct marketers asserted, for 

example, ‘‘the Proposed Rule goes too 

far in appearing to require a specific 

date by which consumers must act to 

stop charges when certain negative 

option plans are inherently more 

flexible and allow consumers to cancel 

anytime.’’ 286 Commenters also found 

the requirement to disclose ‘‘the 

information necessary for the consumer 

to cancel the negative option feature’’ 

was vague and impractical. They 

contended the requirement would result 

in unnecessary details crowding out 

other disclosures.287 IAB contended ‘‘[a] 

more effective strategy [regarding 

cancellation disclosures] would be to 

make clear but concise disclosures of 

where that information can be 

found.’’ 288

Additionally, multiple commenters 

criticized the provision requiring the 

placement of material terms ‘‘directly 

related to the negative option feature’’ 

. . . ‘‘immediately adjacent’’ to 

recording the consumer’s consent.289

Commenters asserted having numerous 

disclosures in a constrained space 

would impair consumers’ ability to 

make informed choices. As an 

individual commenter explained, ‘‘this 

important information may still become 

overwhelming to a user, or challenge the 

integrity of other disclosures if it must 

compete for space (especially because 

this disclosure must be placed 

immediately adjacent to where a user 

will consent to the negative option 

feature).’’ 290 NRF found unclear the 

distinction between which terms are or 

are not ‘‘directly related to the negative 

option feature.’’ 291 Other commenters 

noted the ‘‘immediately adjacent’’ 

requirement may not be appropriate for 

voice transactions.292

Finally, one commenter expressed 

uncertainty about the meaning of the 

‘‘other information’’ provision. NRF said 

it ‘‘asks companies to walk a tight rope 

between ensuring they contain all 

material terms, while risking liability if 

they include ‘any information not 

directly related to the material 

terms.’ ’’ 293

The State AGs also recommended 

three amendments to this proposal. 

First, they recommended requiring 

sellers to ‘‘disclose all material policies 

concerning cancellation.’’ Second, they 

recommended ‘‘sellers be required to 

disclose ‘all the information necessary 

for the consumer to effectively cancel 

the negative option feature.’ ’’ (Emphasis 

in comment.) They explained, 

‘‘[d]isclosures in the form of ‘click-hereto-cancel’ icons, which lead to terms 

and conditions pages, confusing 

cancellation flows, or do not otherwise 

explain how to cancel online, should 

not be permitted.’’ Third, they 

recommended ‘‘the FTC amend this 

provision to require that the important 

information identified by this proposed 

Rule be provided to the consumer in a 

manner that is capable of being retained 

by the consumer.’’ 294

(b) Analysis 

Based on the record, the Commission 

retains proposed § 425.4 with several 

clarifications. First, as explained in 

section VII.B.3 of this SBP, the 

Commission adds a definition of 

‘‘material’’ at § 425.2(e). Second, in 

§ 425.4(a), the Commission clarifies 

three of the listed types of important 

information sellers must provide and 

omits one to address commenters’ 

concerns. Third, as explained in section 

VII.B.4.b.2 of this SBP, the Commission 

revises the definition of ‘‘clear and 

conspicuous’’ in § 425.2(c). Fourth, in 

§ 425.4(b)(2) the Commission clarifies 

language regarding ‘‘placement’’ of 

disclosures. Finally, the Commission 

clarifies the language prohibiting sellers 

from including ‘‘any other information’’ 

that ‘‘interferes with, detracts from, 

contradicts, or otherwise undermines’’ 

consumers’ abilities to read, hear, see, or 

understand the required disclosures. 

(1) The Commission declines to limit 

the required important information 

under § 425.4(a). 

The Commission declines to limit the 

scope of the required information under 

this provision to only information 

related to the negative option feature. 

Section 425.4(a)’s requirement that 

sellers disclose ‘‘all material terms’’ 

prior to obtaining the consumer’s billing 

information is consistent with ROSCA 

and section 5 of the FTC Act. Moreover, 

in the Commission’s law enforcement 

experience such a provision is necessary 

to prevent deception.295 Therefore, 

extending this requirement is well 

within the Commission’s rulemaking 

authority.296

To address commenters’ concerns 

about clarity, however, § 425.2(e) adds a 

definition of ‘‘material;’’ specifically, 

material means ‘‘likely to affect a 

person’s choice of, or conduct regarding, 

goods or services.’’ 297 This definition is 

consistent with longstanding section 5 

case law and other Commission rules 

defining ‘‘material.’’ 298


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to affect their choice of, or conduct regarding, a 

product.’’); see also FTC v. Cyberspace.com, LLC, 

453 F.3d 1196, 1201 (9th Cir. 2006); 16 CFR 310.2(t) 

(TSR); 16 CFR 461.1 (Impersonation Rule); Policy 

Statement on Deception (Oct. 14, 1983) (appended 

to In re Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 

(1984)). 

299 In the misrepresentations provision (§ 425.3), 

the final Rule uses the term ‘‘including’’ to provide 

examples of categories of potentially material facts. 

In the disclosures provision, the final Rule retains 

the proposed Rule’s use of ‘‘and including’’ (rather 

than just ‘‘including’’) to establish all of the 

specifically listed disclosures as being always 

material. 

300NPRM, 88 FR 24735 (proposed 425.4). 

301The final Rule requires sellers to disclose ‘‘The 

amount (or range of costs) the consumer will be 

Charged and, if applicable, the frequency of the 

Charges a consumer will incur unless the consumer 

takes timely steps to prevent or stop those Charges.’’ 

302For example, IAB suggested the Commission 

should require sellers ‘‘to make clear but concise 

disclosures of where [cancellation] information can 

be found, so consumers can find that information 

if and when it is relevant to them.’’ IAB, FTC–2023– 

0033–1000. 

303The Commission declines to adopt the State 

AGs three suggestions to supplement this section. 

The Commission expects the final Rule will address 

two of those suggestions (disclosure of ‘‘all material 

policies concerning cancellation’’ and of ‘‘all the 

information necessary for the consumer to 

effectively cancel the negative option feature’’) 

through the requirement that sellers disclose all 

material terms (§ 425.4), the prohibition of 

misrepresentations of material facts or terms 

including those pertaining to cancellation (§ 425.3), 

and the requirement of a simple cancellation 

mechanism (§ 425.6). The Commission expects to 

address the concerns underlying their third 

suggestion (‘‘to require that the important 

information identified by this proposed Rule be 

provided to the consumer in a manner that is 

capable of being retained by the consumer’’), 

through its further development of the reminders 

requirement. In the interim, the Commission 

expects the Rule provisions as adopted will 

encourage sellers to make important information 

easy to find and easy to retain. 

304 It is a violation of section 5 for a seller to 

retain and use a consumer’s payment information 

without the consumer’s consent. E.g., FTC v. Classic 

Closeouts LLC, No. 2:09–cv–2692 (E.D.N.Y. 2009). 

305See FTC v. Amazon.com, Inc., No. 2:23–cv– 

00932, 2024 WL 2723812, at *11 (W.D. Wash. May 

28, 2024) (‘‘Nothing in ROSCA says that companies 

. . . may not give consumers the option to autofill 

the billing information already on file or simply to 

provide billing information after the disclosures, 

but ROSCA requires that consumers be given that 

choice after the disclosures.’’) (emphasis in 

original). 

Additionally, the Commission 

modifies the proposed list of important 

information.299 The Commission retains 

the first proposed requirement that 

sellers must disclose ‘‘[t]hat consumers 

will be Charged for the good or service, 

or that those Charges will increase after 

any applicable trial period ends, and, if 

applicable, that the Charges will be on 

a recurring basis, unless the consumer 

timely takes steps to prevent or stop 

such Charges.’’ 300 The Commission 

continues to find this requirement 

appropriate to combat deception. 

The Commission revises the second 

proposed disclosure, that sellers provide 

‘‘the deadline (by date or frequency) by 

which the consumer must act in order 

to stop all charges.’’ As revised, this 

provision requires sellers to disclose 

‘‘each deadline (by date or frequency) 

by which the consumer must act to 

prevent or stop the Charges.’’ This 

change clarifies there may not be a 

single ‘‘deadline’’ by which a consumer 

must act to ‘‘stop all charges.’’ A single 

seller, for example, may offer a single 

consumer multiple goods or services, 

and the consumer may wish to stop 

some charges without terminating the 

entire relationship. The Commission 

also clarifies that ‘‘frequency’’ as used in 

the final Rule includes a description of 

an irregular frequency (e.g., within a 

certain period after the seller notifies 

the consumer a new item in a series has 

become available) as well as a regular 

one (e.g., the 15th of each month). 

The Commission also clarifies the 

third proposed disclosure. The 

proposed Rule required sellers to 

disclose ‘‘[t]he amount (or range of 

costs) the consumer will be charged, 

and, if applicable, the frequency of such 

charges a consumer will incur unless 

the consumer takes timely steps to 

prevent or stop those charges’’).301 The 

record suggests, however, that in some 

circumstances, the amounts to be 

charged may be inexact before the seller 

obtains the consumer’s billing 

information. For example, taxes or 

delivery fees may depend in part on the 

billing information the consumer 

provides. Thus, the Commission 

clarifies under the final Rule as adopted, 

the ‘‘amount (or range of costs)’’ need 

not be exact if an exact figure is 

impossible, but the seller must give a 

reasonable approximation. For example, 

it is within the meaning of ‘‘amount (or 

range of costs)’’ for a seller to disclose 

an amount ‘‘plus tax’’ where the seller 

requires billing information to 

determine the actual amount of tax. 

However, a ‘‘plus shipping’’ disclosure 

may not be sufficient if the amount of 

shipping is beyond what a consumer 

would reasonably expect or is greater 

than the amount a seller would 

reasonably incur for shipping. In such a 

circumstance, the seller would need to 

provide an estimate of shipping costs. 

These clarifications should address 

commenters’ concerns about having to 

disclose an exact cost when doing so is 

not possible. 

The final Rule omits the proposed 

fourth disclosure: the date (or dates) 

each charge will be submitted for 

payment. The Commission is persuaded 

by commenters’ concern that a specific 

date or dates may be cumbersome or 

impossible to calculate. For example, if 

the seller will submit a charge when it 

ships a new item in a series, the seller 

may not be able to predict the specific 

dates it will submit the charge in the 

future. In addition, in light of the 

change to the placement requirements of 

§ 425.4(b)(2)(i), discussed below, 

including these dates could reduce the 

clarity and conspicuousness of higher 

priority adjacent disclosures (especially 

cancellation deadlines, which will often 

occur before dates of charges). If, 

however, disclosure of the date (or 

dates) each charge will be submitted for 

payment is necessary to prevent 

deception in individual cases, such 

disclosure is required under § 425.4(a). 

However, its placement is governed by 

revised § 425.4(b)(2)(ii) rather than 

§ 425.4(b)(2)(i). 

Finally, the Commission clarifies the 

fifth proposed mandatory disclosure 

(the fourth in the final Rule). The 

proposed Rule required sellers to 

disclose ‘‘[t]he information necessary for 

the consumer to cancel the negative 

option feature’’. In contrast, the final 

Rule requires sellers to disclose ‘‘The 

information necessary for the consumer 

to find the simple cancellation 

mechanism required pursuant to 

§ 425.6’’. This change addresses 

commenters’ concern the language of 

the proposed Rule, combined with the 

placement requirements of 

§ 425.4(b)(2)(i), would result in detailed 

cancellation disclosures crowding out 

other important required disclosures.302

This new language should provide 

consumers with concise critical upfront 

information about how to cancel, while 

offering sellers flexibility to avoid 

obscuring other important 

information.303

Some sellers expressed concern 

regarding the timing of disclosures 

where a consumer previously elected to 

save billing information with the seller. 

To address this concern the Commission 

now clarifies that, where a consumer 

has previously provided account 

information to the seller and expressly 

allowed the seller to store that 

information,304 the seller must make the 

required disclosures prior to obtaining 

the consumer’s consent to use saved 

account information.305

(2) The Commission modifies the 

requirements of § 425.4(b) to promote 

clarity. 

Section 425.4(b)(1) provides, ‘‘[e]ach 

disclosure required by paragraph (a) of 

this section must be clear and 

conspicuous.’’ The Commission retains 

this requirement but revises the 

definition of clear and conspicuous at 

§ 425.2(c) to address commenters’ 

concerns regarding space-constrained 


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306The Commission declines to adopt NFIB’s 

suggested change to strike the provision ‘‘The 

disclosure must use diction and syntax 

understandable to ordinary consumers’’ and replace 

it with ‘‘ ‘The disclosure must use words and 

grammar that ordinary consumers would likely 

understand.’ ’’ Particularly in the context of audio 

disclosures, the terms ‘‘diction and syntax’’ provide 

clearer requirements than the terms ‘‘words and 

grammar.’’ NFIB, FTC–2023–0033–0789. 

307NRF, FTC–2023–0033–1005; Law Professors, 

FTC–2023–0033–0861. 

308Coalition, FTC–2023–0033–0884; Chamber, 

FTC–2023–0033–0885. 

309 Kuehn, FTC–2023–0033–0871; NRF, FTC– 

2023–0033–1005. 

310See, e.g., FTC v. RevMountain, LLC, No. 2:17– 

cv–02000 (D. Nev. 2017); FTC v. Cyberspace.com, 

LLC, 453 F.3d 1196 (9th Cir. 2006); United States 

v. Mantra Films, Inc., No. 2:03–cv–9184 (C.D. Cal. 

2003); FTC v. Crescent Publ’g Grp., Inc., 129 F. 

Supp. 2d 311 (S.D.N.Y. 2001). 

disclosures.306 Specifically, the 

Commission deletes the sentence, ‘‘A 

disclosure is not Clear and Conspicuous 

if a consumer must take any action, 

such as clicking on a hyperlink or 

hovering over an icon, to see it.’’ This 

prohibition would have made effective 

space-constrained disclosures of the 

terms required by the final Rule difficult 

if not impossible. However, a clear and 

conspicuous disclosure still must be 

‘‘unavoidable.’’ By this requirement, 

consumers are protected from buried or 

inconspicuous disclosures. Sellers, on 

the other hand, can make disclosures 

‘‘unavoidable’’ even if the consumer 

must take some action to see it. 

Specifically, the seller could make it 

impossible for the consumer to consent 

to a transaction or feature unless and 

until the consumer has seen the 

disclosure. For example, a seller dealing 

with space constraints on a mobile 

device might not display a consent 

button until after the consumer has 

scrolled down to a clear disclosure and 

then clicked a button indicating they 

have seen the disclosure. 

Section 425.4(b)(2) (‘‘Placement’’) 

retains the proposed Rule’s structure 

requiring a subset of disclosures to 

‘‘appear immediately adjacent to the 

means of recording the consumer’s 

consent for the negative option feature,’’ 

while setting a more general timing 

requirement regarding other disclosures. 

However, the Commission has revised 

some terms to promote clarity. 

Specifically, final § 425.4(b)(2)(i) 

requires only the four specific 

mandatory disclosures listed in 

§ 425.4(a) to appear ‘‘immediately 

adjacent to the means of recording the 

consumer’s consent.’’ The Commission 

is persuaded by commenters’ concerns 

that requiring market participants to 

determine which required disclosures 

are ‘‘directly related to the negative 

option feature,’’ and which are not, is 

too great a burden and could lead to 

consumer confusion.307 Thus, rather 

than define ‘‘directly related to the 

negative option feature,’’ the 

Commission removes this phrasing and 

confines the ‘‘immediately adjacent’’ 

requirement to a specific, narrow list of 

disclosures. This change provides 

clarity and improves predictability for 

consumers, and should prevent 

disclosure overload. 

Several commenters requested 

clarification of the ‘‘immediately 

adjacent’’ requirement in the context of 

voice transactions.308 In response, the 

Commission clarifies to comply with 

this requirement, a voice transaction 

seller must make the required 

disclosures immediately before 

requesting and recording the consumer’s 

consent to the negative option feature. 

Two commenters expressed concern 

that requiring sellers to make 

disclosures ‘‘before consumers make a 

decision to buy’’ creates uncertainty 

because it is unclear when that 

triggering event occurs.309 The 

Commission agrees. Therefore, it revises 

§ 425.4(b)(2)(ii) to provide generally for 

all required disclosures to appear before 

the seller obtains consumer consent to 

the transaction pursuant to § 425.5. This 

amended language provides a triggering 

event based on a clear point in the 

process. Additionally, the Commission 

revises § 425.4(b)(2)(ii) to remove the 

phrase ‘‘not directly related to the 

negative option feature,’’ doing so for 

the same clarity reasons described above 

for removing the phrase ‘‘directly 

related to the negative option feature’’ 

from § 425.4(b)(2)(i). 

Finally, the Commission adopts a 

clarified version of § 425.4(b)(3) (‘‘Other 

information’’). The Commission retains 

the proposed Rule’s requirement that 

sellers not employ ‘‘other information 

that interferes with, detracts from, 

contradicts, or otherwise undermines 

the ability of consumers to read, hear, 

see, or otherwise understand the 

disclosures.’’ However, the Commission 

finds the final clause in the proposed 

Rule (‘‘including any information not 

directly related to the material terms 

and conditions of any negative option 

feature’’) could be read to contradict 

other requirements of the Rule. 

Specifically, there may be necessary 

material disclosures not directly related 

to the terms and conditions of a negative 

option feature, and it is illogical to 

simultaneously require these 

disclosures (through §§ 425.4(a) and 

(b)(2)) and prohibit them (through 

§ 425.4(b)(3)). The Commission 

therefore omits the clause from the final 

Rule. This revision does not alter the 

requirement of § 425.4(b)(2)(i) that 

certain specific disclosures be made 

clearly and conspicuously immediately 

adjacent to the means of recording the 

consumer’s consent. A seller who makes 

additional disclosures immediately 

adjacent to the means of recording the 

consumer’s consent in a manner 

undermining the clarity and 

conspicuousness of the required 

§ 425.4(b)(2)(i) disclosures violates 

§ 425.4(b)(2)(i) and § 425.4(b)(3). 

5. Proposed § 425.5 Consent 

Section 425.5(a) of the proposed Rule 

prohibited sellers from charging 

consumers before obtaining their 

express informed consent to the 

negative option feature. This provision 

mirrors 15 U.S.C. 8403(2) (ROSCA), but 

provided specificity for sellers covered 

by the Rule and to prevent unfair and 

deceptive practices. Specifically, the 

provision addressed one of the most 

pervasive problems of negative option 

marketing: sellers employing inadequate 

consent procedures to increase 

enrollment. Even for marketers trying to 

comply with the law, negative option 

programs present unique challenges. 

Specifically, consumers often focus on 

the aspects of an offer that mirror the 

offers they regularly encounter (e.g., the 

quality, functionality, and one-time 

price of the item) and think they are 

consenting to these core attributes while 

missing the negative option feature. 

To address this problem, § 425.5(a)(1) 

of the proposed Rule required sellers to 

obtain a consumer’s unambiguously 

affirmative consent to the feature 

separately from any other portion of the 

transaction. Section 425.5(a)(2) of the 

proposed Rule further required the 

seller to exclude any information that 

‘‘interferes with, detracts from, 

contradicts, or otherwise undermines’’ 

the consumer’s ability to provide 

express informed consent to the 

negative option feature. This prohibition 

is consistent with longstanding 

Commission precedent that consent can 

be subverted, including by so-called 

‘‘dark patterns,’’ sophisticated design 

practices used to manipulate users into 

making choices they would not 

otherwise have made.310

Additionally, under § 425.5(a)(3) of 

the proposed Rule, sellers had to obtain 

consumers’ unambiguously affirmative 

consent to the rest of the transaction to 

ensure consumers agreed to all elements 

of the agreement, even those not 

specifically related to the negative 

option feature. Further, § 425.5(a)(4) of 

the proposed Rule required sellers to 

obtain and maintain (for three years or 

a year after cancellation, whichever is 


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311NPRM, FR 88 24727 n.70; see also id. at 

24734. 

312To avoid potential conflict with EFTA, this 

proposed provision does not apply to transactions 

covered by the preauthorized transfer provision of 

that Act, 15 U.S.C. 1693e, and Regulation E, 12 CFR 

1005.10. Those EFTA provisions, which apply to a 

range of preauthorized transfers include some used 

for negative options, contain various prescriptive 

requirements (e.g., written consumer signatures that 

comply with E-Sign, 15 U.S.C. 7001–7006, evidence 

of consumer identity and assent, the inclusion of 

terms in the consumer authorization, and the 

provision of a copy of the authorization to the 

consumer) beyond the measures identified in the 

proposed Rule. Consequently, compliance with the 

proposed Rule would not necessarily ensure 

compliance with Regulation E. For example, use of 

a check box for consent without additional 

measures may not comply with Regulation E’s more 

specific authorization requirements. 

313NPRM, 88 FR 24728. 

314See, e.g., State Attorneys General (ANPR), 

FTC–2019–0082–0012; State AGs, FTC–2023–0033– 

0886 (citing cases); FTC v. Amazon.com, Inc., No. 

2:23–cv–0932 (W.D. Wash. 2023); see also n.109. 

315See, e.g., Anonymous commenter, FTC–2023– 

0033–0799 (automatically enrolled in program 

without consent); Individual commenter, FTC– 

2023–0033–0039 (free-trial conversion to one year 

plan without consent); Individual commenter-FTC– 

2023–0033–0052 (discount to full-price conversion 

without consent); Individual commenter, FTC– 

2023–0033–1119 (cancelled, then automatically reenrolled without consent); Individual commenter, 

FTC–2023–0033–0079 (automatically re-enrolled 

without consent); Individual commenter, FTC– 

2023–0033–0083 (no disclosure account would be 

automatically renewed); FTC–2023–0033–0138 

(charged after cancellation); Individual commenter, 

FTC–2023–0033–0275 (no affirmative consent to 

monthly charge). 

316Sirius XM, FTC–2023–0033–0857 (businesses 

should be required to obtain express informed 

consent to the negative option feature at the point 

of sale); PDMI, FTC–2023–0033–0864 (no objection 

to the general requirement that sellers obtain a 

consumer’s consent to a transaction containing a 

negative option feature); MIA, FTC–2023–0033– 

1008 (agreeing with the consent requirement under 

the proposed Rule). 

317Berkely Consumer Law Center, FTC–2023– 

0033–0855; State AGs, FTC–2023–0033–0886 

(noting State Attorneys General support the FTC’s 

proposed consent requirements and agree this 

provision is necessary given how easily marketers 

can enroll consumers in negative option programs 

without actual consent.). One individual consumer 

generally supported the separate consent 

requirements of the proposed Rule, but asked that 

the regulation prevent businesses from only offering 

goods and services through auto-renewal and 

subscription programs, i.e., consumers should have 

the option to purchase a good or service a la carte 

and not only on a recurring basis. Individual 

commenter, FTC–2023–0033–0026. 

318Sirius XM, FTC–2023–0033–0857 (requiring 

an additional consent will only result in consumer 

confusion); NCTA, FTC–2023–0033–0858 

(‘‘requiring two consents could lead to consumer 

confusion (to say nothing of their exasperation at 

being forced to read and provide consent to a 

plethora of successive and largely duplicative 

documents). They may wonder why they are being 

asked to consent twice to a single transaction. And 

might worry that they have somehow 

misunderstood one or both of the consent notices’’); 

PDMI, FTC–2023–003–0864 (anecdotal evidence 

received from several PDMI members demonstrates 

that any time an additional choice or check box is 

offered to a consumer during a single transaction, 

such extra steps are likely to cause consumer 

confusion); N/MA, FTC–2023–0033–0873 

(‘‘Requiring sellers to separate a single unified offer 

into separate components is not only unnecessary, 

it risks creating consumer confusion and fatigue’’ 

and consumers may ‘‘simply abandon the 

transaction’’); RILA, FTC–2023–0033–0883 

(‘‘requirement for two distinct consents . . . may be 

confusing and not helpful to consumers.’’); DCN, 

FTC–2023–0033–0983 (‘‘We are concerned that 

requiring a separate consent would be confusing for 

the consumer who may not have the details of the 

entire contract readily available in the mandated 

separate context. For example, most consumers 

would likely want to review all of the benefits they 

would receive as part of a subscription including 

any discounts when deciding on whether to choose 

the option of automatic renewal.’’); APCIA, FTC– 

2023–0033–0996 (‘‘Requiring a separate consent for 

a feature that is inherent in service contracts— 

continuous coverage—seems unnecessary and 

detrimental to consumers.’’). 

319 IAB, FTC–2023–0033–1000 (‘‘Furthermore, 

consumers are familiar with subscription sign-up 

experiences and do not expect to have to consent 

a second time once they choose to purchase an 

autorenewal plan.’’). One individual consumer 

confirmed the comment. Individual commenter, 

FTC–2023–0033–0552 (‘‘The rule specifically 

prescribes that users must affirmatively assent 

specifically to the negative option feature, but in 

cases where a user is only purchasing a negative 

option product, how should other disclosures be 

presented?’’) 

320NCTA, FTC–2023–0033–0858; Sonsini Alarm 

Clients, FTC–2023–0033–0860 (‘‘could lead to 

consumers inadvertently failing to consent to autorenewal (because they did not notice the second 

check box) and having an unintended lapse in 

home security system coverage.’’); Asurion, FTC– 

2023–0033–0878 (‘‘many consumers who want and 

could benefit from auto-renewal protection 

provisions will neglect to make the requisite two 

separate affirmative consents and suffer real 

consequences when they find themselves with a 

broken device during a gap in coverage’’); APCIA, 

FTC–2023–0033–0996 (‘‘A consumer who wants a 

service contract but then inadvertently fails to 

check a box indicating separate consent for the 

negative option feature could find that they no 

longer have coverage at the time they most need 

it.’’). 

321See, e.g., DCN, FTC–2023–0033–0983 (could 

lead to over-notification); CCIA, FTC–2023–0033– 

0984 (‘‘Adding too much additional information or 

too many required actions in a purchase cart has 

diminishing returns for consumer comprehension 

and attention, and can increase the cognitive load 

for consumers to the point that they simply stop 

reading or give up on the purchase.’’); ANA, FTC– 

2023–0033–1001. 

322NCTA, FTC–2023–0033–0858 (‘‘would require 

companies to change their current customer sign-up 

flows, at significant cost, without providing 

consumers with any additional benefits’’); PDMI, 

FTC–2023–003–0864 (‘‘requiring merchants to 

implement a double opt-in would impose an 

extraordinary financial and resource burden on 

sellers.’’); id. (double opt-in requirements ‘‘makes 

absolutely no sense, where, as is often the case, 

there is no transaction separate from the negative 

option transaction’’); SCIC, FTC–2023–0033–0879; 

Chamber, FTC–2023–0033–0885 (little to no 

evidence that double opt-in will create any 

longer) verification of the consumer’s 

consent. The Commission specifically 

sought comment on the appropriate 

recordkeeping period.311

To maintain consistency with the 

TSR, § 425.5(b) contained a crossreference to 16 CFR part 310 so sellers 

subject to the TSR know they must 

comply with all applicable provisions of 

that Rule, including those related to preacquired account information and freeto-pay conversions. 

Proposed § 425.5(c) provided an 

exemplar consent mechanism for those 

making written offers (including those 

on the internet) to illustrate how sellers 

could obtain consumers’ unambiguously 

affirmative consent to the negative 

option feature. Specifically, this 

provision stated for all written offers, 

sellers may obtain such consent through 

a check box, signature, or other 

substantially similar method, which the 

consumer must affirmatively select or 

sign to accept the negative option 

feature. This consent had to be 

independent from any other portion of 

the offer.312

Finally, the Commission invited 

comments on whether sellers offering 

free trials should be required to obtain 

an additional round of consent before 

charging a consumer at the end of a free 

trial.313

(a) Summary of Comments 

Consistent with the Commission’s and 

States’ enforcement experience,314

individual consumers’ comments 

confirm the need for clear, 

unambiguous, affirmative consent to a 

negative option feature. These 

comments identify numerous examples 

of consumers’ unwitting enrollment in 

negative option programs.315

Sellers and trade groups also 

supported the requirement,316 as did 

consumer groups.317 However, sellers 

and trade groups expressed concern 

about the requirement that sellers obtain 

separate, unambiguously affirmative 

consent to the ‘‘rest of the transaction,’’ 

as opposed to the ‘‘negative option 

feature’’ itself. Specifically, these 

commenters asserted consumers may be 

confused where the product or service 

itself is only offered as a negative 

option, such as with streaming services 

or periodicals.318 As explained by one 

commenter, in these situations a second 

consent is likely unanticipated, and 

thus, could be confusing.319

Other groups asserted if consumers 

are confused, they may not affirmatively 

consent to the rest of the transaction, 

which could cause uncertainty about 

the existence of the contract.320

Commenters also noted too many 

required actions during the purchasing 

process may lead to ‘‘fatigue’’ and 

‘‘cognitive overload,’’ causing 

consumers to abandon transactions they 

may have otherwise wanted.321 Finally, 

several commenters complained the 

separate consent requirements would be 

difficult (and costly) to implement, but 

without any benefit to consumers.322


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consumer benefit, instead will increase consumer 

fatigue); see also IAB, FTC–2023–0033–1000 

(double opt-in could be especially burdensome for 

bundled services, requiring consumers to check an 

additional box for each service, without added 

benefit to clarity or disclosure); ICA, 2023–0033– 

1142 (‘‘requiring recording keeping of ‘‘express 

informed consent’’ potentially expressed through 

verbal, digital, or written records for multiple years 

will be an onerous and expensive requirement for 

small business owners to fulfill.’’). 

323Chamber, FTC–2023–0033–0885 (‘‘unless 

there is a negative promotional option, service 

providers should not be required to have a separate 

consent for monthly billing and the underlying 

transaction when the underlying transaction is for 

a monthly service.’’); see also MIA, FTC–2023– 

0033–1008 (‘‘an additional consent to initiate a 

Subscription is unnecessary and superfluous’’). 

324See, e.g., Direct Marketing Companies, FTC– 

2023–0033–1016. 

325 Kuehn, FTC–2023–0033–0871; RILA, FTC– 

2023–0033–0883. 

326 Kuehn, FTC–2023–0033–0871. 

327 Direct Marketing Companies, FTC–2023– 

0033–1016 (‘‘the Commission provides no evidence 

or rationale that a robust, clear and conspicuous 

disclosure proximate to the consumer’s consent 

would be insufficient to prevent deception and 

remedy allegedly prevalent unfair or deceptive acts 

and practices’’). 

328CTA, FTC–2023–0033–0997. 

329PDMI, FTC–2023–003–0864; Sirius XM, FTC– 

2023–0033–0857 (‘‘Businesses should be able to 

obtain such consent in conjunction with the other 

terms of an offer,[ ] as long as they clearly and 

conspicuously disclose the negative option features 

and the other material terms of the offer and refrain 

from ‘‘includ[ing] any information that ‘interferes 

with, detracts from, contradicts, or otherwise 

undermines’’ the negative option terms.’’). 

330PDMI, FTC–2023–003–0864. 

331NRF, FTC–2023–0033–1005 (citing Meyer v. 

Uber Techs., Inc., 868 F.3d 66, 79 (2d Cir. 2017)). 

It is unclear from NRF’s comment whether it 

questioned separate consent generally, or the 

guidance on a check box. 

332 Direct Marketing Companies, FTC–2023– 

0033–1016. 

333ANA, FTC–2023–0033–1001; see also BSA, 

FTC–2023–0033–1015 (‘‘the current language could 

be read to require a company to retain for three 

years the records of a customer who signed up for 

a free trial but cancelled before the trial ended—and 

was therefore never a paying customer.’’). 

334APCIA, FTC–2023–0033–0996; IAB, FTC– 

2023–0033–1000 (‘‘this requirement will be 

significantly costly, as subscription businesses will 

need to overhaul their sign-up processes to comply 

with this requirement. Businesses seeking to offset 

this increased cost will be forced to pass this cost 

to consumers or avoid offering subscriptions at 

all’’). 

335NCTA, FTC–2023–0033–0858 (‘‘The proposal 

fails to account for the immense burden the 

proposal would impose on companies using 

alternative means to sell their products and services 

by requiring them to create and implement ways to 

capture and store duplicative layers of consumer 

consent.’’). 

336CCIA, FTC–2023–0033–0984 (‘‘This record 

retention rule also seems to be at odds with key 

principles of consumer privacy, namely the need to 

minimize the amount of consumer data that 

businesses hold and to enable customers to request 

deletion of any data in possession of a third party. 

A shorter mandatory retention period is more 

appropriate for both businesses and consumers.’’); 

NCTA, FTC–2023–0033–0858 (‘‘Not only is it 

expensive to maintain these records, it does not 

comport with privacy best practices.’’). 

337 ICA, 2023–0033–1142 (‘‘Decrease the duration 

of the record-keeping requirement to six months 

after the business and the consumer enters into the 

agreement.’’); see also Direct Marketing Companies, 

FTC–2023–0033–1016 (change recordkeeping 

requirement to keep or maintain records ‘‘for at 

least one year if the consumer is charged at least 

twice within six months after the initial charge; or 

for at least three years if the consumer is not 

charged at least twice within six months after the 

initial charge.’’). 

Thus, these commenters asked the 

Commission to exclude transactions 

where the negative option feature is not 

independent of the good or service 

being sold, i.e., where the good or 

service is itself only offered as a 

negative option,323 or to delete the 

requirement that sellers obtain separate, 

unambiguous, affirmative consent ‘‘to 

the rest of the transaction.’’ 324

Two commenters asked the 

Commission to modify the proposed 

provision by merging consent to the 

transaction and the negative option 

feature. These commenters suggested a 

separate consent should only be 

necessary where there are two 

independent portions of the transaction: 

one related to the negative option 

feature and a second for the sale of a 

separate good or service (including a 

free trial).325 Without this change, 

commenter Kuehn suggested ‘‘the 

proposed Rule could have the 

unintended result of diminishing the 

efficacy of other important terms of the 

contract.’’ Accordingly, Kuehn 

suggested the Commission revise the 

definition of negative option feature to 

encompass the entire contract (rather 

than a provision of the contract).326 This 

alteration, along with changing ‘‘rest of 

the transaction’’ to ‘‘the sale of another 

good or service,’’ would make it clear 

separate consent is only required where 

the seller has both an auto renewal 

agreement and the sale of another good 

or service. 

IAB, DCN, CTA, and several direct 

marketing companies asserted the 

Commission could achieve the same 

outcome—informed consent—through 

less restrictive means, e.g., by requiring 

a clearer disclosure of the negative 

option feature.327 For example, CTA 

posited: ‘‘[a]lternatively, to advance the 

same goal, and because the Proposed 

Rule already requires clear and 

conspicuous disclosure of material 

terms, the FTC could instead require 

subscription service providers to 

prominently disclose subscription terms 

in a manner that differentiates them 

from other disclosures, such as in 

bolded or underlined font, in the course 

of obtaining consumer consent to the 

transaction.’’ 328 Additionally, several 

commenters questioned ‘‘why a seller 

should be precluded from including 

other material terms of the transaction 

in obtaining a single consent.’’ 329

Some commenters raised additional 

concerns. For instance, several 

commenters challenged the 

Commission’s statement that a separate 

check box or similar method could be 

used to record a consumer’s 

unambiguously affirmative consent. 

Specifically, PDMI contended the check 

box, signature, or ‘‘substantially 

similar’’ method of consent could 

quickly become obsolete and ‘‘replaced 

by far more effective and consumer 

friendly mechanisms.’’ 330 Another, 

NRF, argued courts routinely hold a 

separate check box is not required for 

consumers to manifest asset to terms 

and conditions of the agreement, so long 

as the terms are reasonably 

conspicuous.331 Finally, a group of 

direct marketing companies, argued 

standalone consent is not necessary or 

reasonable, and other methods could 

suffice. They suggested the Commission 

include language that it ‘‘shall be a 

question of fact’’ whether the seller 

obtained consent through another 

means.332

Additionally, several trade groups and 

sellers expressed concern about the 

NPRM’s proposed recordkeeping 

requirements. For instance, one trade 

group explained the proposed 

requirements ‘‘would require sellers to 

maintain records of consumer consent 

for at least three years, even for 

consumers who signed up for a free trial 

and cancelled it before being charged. 

As drafted, the proposed amendments 

would also require sellers to maintain 

records of consumer consent for eleven 

years for individuals who continuously 

subscribe to negative option features for 

at least ten years.’’ 333

Numerous commenters asserted these 

recordkeeping requirements would 

increase costs, which could ultimately 

be passed onto consumers,334 or small 

businesses, especially with respect to 

in-person and telephone transactions.335

Others raised concern the proposed 

recordkeeping requirement could 

conflict with best privacy practices. For 

example, commenters noted the 

retention period is at odds with the 

need to minimize the amount of 

consumer data that businesses hold and 

to enable customers to request deletion 

of their data.336 Commenters also 

suggested the Commission reduce the 

length of the recordkeeping 

requirement, e.g., to six months,337 or 

revise the proposal to eliminate the 

requirement for those who do not allow 

customers to purchase without 


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338PDMI, FTC–2023–003–0864; Chamber, FTC– 

2023–0033–0885. 

339Law Professors, FTC–2023–0033–0861. 

340 Individual commenter, FTC–2023–0033–0843 

(‘‘In addition to making it easy to cancel an online 

subscription, it should be illegal for companies 

offering a ‘free trial’ to bill for any term of 

subscription without an opt-in step. If they really 

believe trying their product will prompt me to keep 

using it, then it needs to be a 2-step process in 

which at the end of the trial period they must ask 

for and receive an opt in before they place a charge 

on my card.’’); Individual commenter, FTC–2023– 

0033–0615 (‘‘Rather than automatic renewals, I 

think subscriptions should only be renewed 

following consumer approval. For example, after a 

14-day trial of an app, consumers should be asked 

if they approve a purchase to continue. If approval 

isn’t given, the default should be that the 

subscription expired and the consumer isn’t 

charged.’’); Individual commenter, FTC–2023– 

0033–0993 (‘‘If it’s a trial subscription the company 

should notify you that your trial is over and affirm 

your desire to continue.’’). 

341 Individual commenter, FTC–2023–0033–0026; 

see also Individual commenter, FTC–2023–0033– 

0583 (‘‘Require that any entity not require a credit 

card on file for a trial, or any free period.’’); 

Individual commenter, FTC–2023–0033–0641 

(‘‘Consumers shouldn’t have to be required to 

submit credit/debit card information for a trial 

usage. And, consumers shouldn’t be automatically 

charged the day after the trial expires.’’); Individual 

commenter, FTC–2023–0033–1069 (‘‘A free trial 

should not create an automatic subscription!’’); 

Individual commenter, FTC–2023–0033–0607 (‘‘A 

‘trial offer’ should be just that—a ONE-TIME 

purchase.’’). 

342State AGs, FTC–2023–0033–0886 (‘‘the State 

Attorneys General again respectfully encourage the 

FTC to require sellers offering free trials to obtain 

an additional round of consent before charging a 

consumer at the completion of the free trial.’’); Law 

Professors, FTC–2023–0033–0861 (‘‘we ask that the 

Commission require additional consent from the 

consumer before a business may convert a free (or 

nominal-fee) trial into an expensive subscription. 

Indeed, it seems that Congress, in adopting ROSCA, 

validated consumer expectations that they would 

‘‘have an opportunity to accept or reject [a] 

membership club offer at the end of [a] trial 

period.’’); TINA, FTC–2023–0033–1139 (‘‘Such 

consumer complaints are consistent with survey 

data showing that 42 percent of consumers forget 

they are still paying for a subscription they no 

longer use.[ ] ‘Many of those happen after you get 

enticed by a free trial for an online streaming 

service or a monthly subscription service for clothes 

or personal items, and then you forget to cancel it 

after that trial is over.’ ’’). 

343Sirius XM, FTC–2023–0033–0857 (‘‘As long as 

consumers are clearly informed about the terms of 

a free trial offer and evince affirmative consent, no 

further consumer consent should be required when 

the free trial period expires.’’). 

344CCIA, FTC–2023–0033–0984; Chamber, FTC– 

2023–0033–0885. 

345This change will not affect a seller’s obligation 

to maintain appropriate records under other 

regulations, e.g., the TSR. 

346See section VII.B.7. 

347Section 425.5(a)(1). 

348Section 425.5(c) allows sellers to comply with 

the requirement to obtain unambiguously 

affirmative consent to the negative option feature 

through a check box, signature, or other 

substantially similar method. 

349See Rule § 425.4(a)(1)–(4). 

350The Commission further notes because the 

seller is obtaining express informed consent to the 

negative option feature separately from the rest of 

the transaction, consumers are, in effect, agreeing to 

both the negative option feature and the sale of the 

good or service separately. 

accepting the terms of the negative 

option feature.338

Two consumer groups supported the 

consent provision but asked the 

Commission to add clarifying language. 

Specifically, Berkeley Consumer Law 

Center asked the Commission to state 

the Rule strictly prohibits the use of 

dark patterns to obtain consent and that 

consent cannot be given through 

silence. A group of professors asked the 

Commission to clarify that disclosures 

‘‘appear in each language in which the 

representation that requires the 

disclosure appears.’’ 339

Finally, commenters split on whether 

the Rule should require separate 

affirmative consent for free-trial offers. 

Several consumers supported requiring 

separate consent at the conclusion of a 

free-trial period,340 with one consumer 

suggesting the Commission ban free-trial 

offers that require the prepurchase of 

the good or service.341 Other consumer 

interest and public advocacy groups 

reiterated consumers often forget, or are 

unaware they have signed up for, a 

negative option feature in connection 

with a free trial offer.342 Sellers and 

trade groups disagreed, specifically 

noting the Commission’s own analysis 

indicating a separate consent may not be 

necessary given the other requirements 

of the Rule 343 and existing State 

laws.344

(b) Analysis 

Based on the record, the Commission 

removes the proposed requirement that 

sellers obtain separate consent to ‘‘the 

rest of the transaction’’ under 

§ 425.5(a)(3). Further, the Commission 

modifies the recordkeeping requirement 

to require sellers to maintain records 

only for three years from the date of 

consent. Alternatively, if sellers can 

show by a preponderance of the 

evidence they use processes that make 

it technologically impossible for a 

consumer to purchase the good or 

service without consent, sellers need 

not retain such records.345 Finally, the 

Commission declines to modify the 

consent provisions to require separate 

consent for free-trial offers. However, 

should the Commission seek additional 

comments about a provision to require 

annual reminders,346 it will consider 

addressing such offers at that time. 

Prior to addressing each of the issues 

listed above, it is important to clarify 

one point. A negative option feature is 

not itself a product or service—it is 

simply a mechanism for repeatedly 

consenting to the extension of a contract 

through silence. Thus, there are not 

situations in which the negative option 

feature is the product, as some 

commenters suggested. In the example 

provided above, a subscription to a 

streaming entertainment service can be 

offered with (e.g., the offer renews each 

month until cancellation) or without 

(e.g., the subscription lasts one year and 

then must be affirmatively renewed, or 

it cancels) a negative option feature. 

There are situations in which sellers 

only offer products or services on a 

negative option basis; however, doing so 

does not lessen the need to ensure 

consumers consent to the negative 

option mechanism within the 

agreement. Therefore, the analysis 

below does not separately address this 

issue. 

(1) The Commission does not adopt a 

requirement for separate consent to ‘‘the 

rest of the transaction’’ because it is 

unnecessary, confusing, and hard to 

implement. 

Based on the comments, the 

Commission finds requiring consumer 

consent to ‘‘the rest of the transaction’’ 

apart from the negative option feature is 

unnecessary, potentially confusing, and 

may be hard to implement. First, even 

without the separate consent 

requirement, the proposed Rule 

contained several elements that work 

together to ensure consumers know they 

are agreeing to a negative option feature. 

Specifically, the proposed Rule required 

sellers to obtain the consumer’s 

unambiguously affirmative consent to 

the negative option feature separately 

from any other portion of the 

transaction 347 through, for example, a 

separately presented check box.348 It 

also required sellers to clearly and 

conspicuously provide important 

information immediately adjacent to the 

request for consumer consent, including 

that the charge will be recurring, the 

deadline to act to stop charges, the 

amount of the charges, and information 

necessary to cancel.349 Further, the 

proposed Rule stated the seller cannot 

include any information or employ any 

techniques that interfere with the 

consumer’s ability to understand these 

important disclosures and provide 

unambiguously affirmative consent to 

the negative option feature. 

Given these protections, a separate 

consent requirement is not necessary.350

Second, the Commission agrees the 

separate consent requirement could 

cause consumer confusion. Moreover, 

compliance with the Rule’s required 

disclosure and consent provisions 

should address the concerns 

commenters raised regarding deception. 

Finally, several sellers suggested, and 

there is no evidence to the contrary, that 

seeking consent to both the negative 


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351See § 425.5(a)(3). 

352NCTA, FTC–2023–0033–0858 (citing FTC, 

‘‘Protecting Consumer Privacy in an Era of Rapid 

Change’’ (2012) at 28, www.ftc.gov/reports/ 

protecting-consumer-privacy-era-rapid-changerecommnedations-businessespolicymakers). 

353ANA, FTC–2023–0033–1001; ESA, FTC– 

2023–0033–0867 (for purchases that cannot be 

completed without a consumer’s consent, a 

business will be deemed compliant with any 

recordkeeping requirement and is not required to 

maintain an individual record of consent). 

354 Importantly, if the seller does not maintain 

records and cannot satisfy the technological 

exemption, the seller has violated the Rule. 

355 Direct Marketing Companies, FTC–2023– 

0033–1016. 

option feature and the rest of the 

transaction could be hard to implement 

for many sellers. Thus, the final Rule 

does not contain the separate consent 

requirement.351

(2) The Commission modifies the 

recordkeeping requirements to address 

legitimate privacy concerns and reduce 

undue burden on small businesses. 

Section 425.5(a)(4) of the proposed 

Rule required sellers to obtain and 

maintain (for three years or a year after 

cancellation, whichever was longer) 

verification of the consumer’s consent to 

the negative option feature. 

Implementation of this requirement 

would undoubtably enhance the FTC’s 

ability to enforce the Rule. However, the 

Commission agrees the proposal creates 

privacy concerns. The Commission has 

long recommended companies employ 

data retention policies that ‘‘dispose of 

data once it has outlived the legitimate 

purpose for which it was collected.’’ 352

Therefore, the Rule’s data retention 

requirement, could, in some instances, 

be at odds with this guidance. Further, 

several commenters asserted a longer 

recordkeeping requirement will be 

burdensome, particularly for small 

businesses. 

Balancing the Commission’s interest 

in robust Rule enforcement against 

privacy and burden concerns, the 

Commission modifies the proposed 

Rule. Specifically, § 425.5(a)(3) of the 

final Rule requires sellers to keep or 

maintain verification of the consumer’s 

consent for a period of three years from 

the date of consent (rather than three 

years or a year after cancellation, 

whichever is longer). Removing the 

requirement that sellers keep records 

until one year after cancellation 

prevents the retention of records for 

very long periods of time while the 

contract is still in force. Moreover, as 

some commenters stated,353 sellers can 

employ technological processes for 

online consent that could alter the 

balance of concerns. Specifically, it is 

technologically feasible to make it 

impossible for customers to enroll 

without providing unambiguously 

affirmative consent. The Commission 

therefore further modifies the 

recordkeeping requirement to eliminate 

the requirement entirely if a seller can 

demonstrate it meets this threshold. The 

final provision will allow sellers to 

destroy consumer records more quickly, 

while accomplishing the same goal.354

Finally, the Commission clarifies 

maintaining copies of advertisements or 

telephone scripts documenting the 

disclosures provided in general does not 

meet this requirement. Such 

information is easily manipulated by 

deceptive sellers and cannot show any 

particular consumer received the 

disclosures prior to giving consent. 

Therefore, sellers must either maintain 

records of each consumer’s 

unambiguously affirmative consent or 

demonstrate they satisfy the 

technological exemption provision. 

(3) Other concerns raised by 

commenters do not warrant 

modifications to the rule. 

As noted above, a few commenters 

questioned the Commission’s proposed 

exemplar consent mechanism under 

§ 425.5(c). This proposed provision 

states for written offers, a check box, 

signature, or ‘‘substantially similar’’ 

method can be used to obtain a 

consumer’s unambiguously affirmative 

consent. The Commission notes the 

mechanism applies to the negative 

option feature only, and thus corrects 

the cross-reference contained in this 

provision from (a)(3) to (a)(1). 

The Commission further notes this 

provision does not require a check box 

or signature. The Commission offered 

these methods only as examples a seller 

can use to obtain unambiguously 

affirmative consent, not the only ways 

to do so. Thus, the exemplar does not 

conflict with caselaw holding that a 

check box is not required to manifest 

consent. The Commission also declines 

to include language in the final Rule, as 

one commenter suggested,355 stating 

whether a seller has complied with this 

provision is a question of fact. This is 

unnecessary because the Commission 

always evaluates sellers’ practices on a 

case-by-case basis to determine whether 

they comply with the law. 

The Commission further declines to 

remove this provision’s reference to 

‘‘substantially similar’’ methods as some 

commenters requested. The language is 

intended to cover any method that 

affords consumers all the same 

protections as a check box or signature. 

The phrase ‘‘substantially similar’’ 

performs this function while allowing 

for technological advancement, 

innovation, and adaption without tying 

sellers to specific mechanism that may 

become obsolete. 

Further, the Commission declines to 

modify the final Rule to allow sellers to 

obtain express informed consent by 

merely ‘‘disclosing’’ the negative option 

more clearly through, e.g., bolded or 

underlined font, rather than obtaining 

expressed informed consent separately 

for the negative option feature. 

Although this change would be ‘‘less 

restrictive,’’ it would not adequately 

protect consumers from unknowingly 

enrolling in negative option programs. 

In the NPRM, the Commission balanced 

the need for clear, unavoidable 

disclosure of, inter alia, the negative 

option feature with the need for 

flexibility to allow sellers to best 

communicate their entire message to 

consumers. The proposed Rule strikes 

the right balance. As discussed above, 

proposed § 425.4 (Important 

Information), required sellers to clearly 

and conspicuously disclose important 

information about the negative option 

feature, immediately adjacent to the 

means of recording consent to the 

feature, and, under § 425.5 (Consent), 

separately from any other portion of the 

transaction. The Commission did not 

specify exact placement, language, or 

font size because doing so would have 

diminished flexibility without a 

sufficient corresponding benefit. 

While this balance is appropriate, the 

required disclosure of important 

information under § 425.4 does not 

replace the requirement that sellers 

obtain consumers’ express informed 

consent. To avoid harm from unfair and 

deceptive practices, it is imperative 

consumers unequivocally understand 

they are agreeing to enrollment in a 

negative option program and 

demonstrate their agreement. 

The Commission also declines to add 

language stating (1) the Rule strictly 

prohibits the use of dark patterns to 

obtain consent and (2) consent cannot 

be given through silence. The Rule 

already addresses both concerns. First, 

the Rule bars any information that 

‘‘interferes with, detracts from, 

contradicts, or otherwise undermines’’ 

the consumer’s ability to provide 

express informed consent. To the extent 

dark patterns run afoul of any of these 

requirements, they are prohibited. To 

the extent they do not, consumers’ 

express informed consent as required by 

the Rule is not implicated. Second, 

under § 425.5, consumers already must 

give affirmative consent. 

Finally, the Commission does not 

need to clarify, as some commenters 

suggested, that required consents 

‘‘appear in each language in which the 


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356Law Professors, FTC–2023–0033–0861. 

357Rule § 425.2(c)(6). 

358 Deceptive sellers also commonly delay 

shipment of goods or services until close to the end 

of the trial period, giving consumers little time to 

stop the charge or cancel the negative option. See, 

e.g., Individual commenter, FTC–2023–0033–0085. 

359NPRM, 88 FR 24729; see ANPR, 84 FR 52395 

(discussing general requirements for nondeceptive 

negative options); id. at 52396 (discussing the 

ongoing problems in the marketplace including 

inadequate or overly burdensome cancellation 

procedures). 

360NPRM, 88 FR 24729. 

361 Individual commenter FTC–2023–0033–0029 

(‘‘Please implement this necessary rule to protect 

consumers and save us hours on the phone 

cancelling services we signed up for with one click 

online.’’); Individual commenter, FTC–2023–0033– 

0072 (‘‘I have had issues with some online 

subscriptions which were entered into purely 

online, but to cancel I had to call a phone number 

open only during certain business hours. I would 

like a rule that requires all subscriptions to be 

available to cancel through the same means as they 

were initiated, whether that is online, in person, 

phone, mail, or chat. I believe that would be fair 

to people of all technological levels while allowing 

businesses to conduct business how they feel 

comfortable without allowing them to create 

unnecessary hurdles for customers looking to end 

their service.’’). 

362 Individual commenter, FTC–2023–0033–0111. 

Thousands of individual consumers repeated this 

phrase through a mass media campaign. See, e.g., 

Anonymous commenter, FTC–2023–0033–0013; 

Individual commenter, FTC–2023–0033–0016 (‘‘If I 

can subscribe in one click, I should be able to 

unsubscribe in one click.’’); Individual commenter, 

FTC–2023–0033–0017 (‘‘It should be as easy as one 

click to cancel an online account.’’); Individual 

commenter, FTC–2023–0033–0068 (‘‘Being able to 

go online and with a simple click be able to cancel 

a subscription would be a dream.’’); see also 

Individual commenter, FTC–2023–0033–0015 

(‘‘Ending a subscription should be as easy as it was 

to sign up. it makes no sense how hard it is to close 

out an account with some places.’’); Individual 

commenter, FTC–2023–0033–0020 (‘‘The time has 

come to make it as easy for consumers to cancel 

subscriptions as it has been to start them.’’); 

Individual commenter, FTC–2023–0033–0087 (‘‘I 

think any offer you can buy with a click should also 

be an offer to unsubscribe with a click.’’). 

363 Individual commenter, FTC–2023–0033–0003; 

see also Individual commenter, FTC–2023–0033– 

0010 (‘‘I for one would be for the Easing of 

subscription cancellation. Having it be much harder 

to cancel a subscription than start it simply 

shouldn’t be.’’); Anonymous commenter, FTC– 

2023–0033–0024 (‘‘It should be no harder for 

consumers to stop giving a company their money 

than it is for them to start giving it to them.’’); 

Individual commenter, FTC–2023–0033–0025 (‘‘In 

fact, it should be as easy to cancel as it is to sign 

up.’’). 

364 Individual commenter, FTC–2023–0033–0231; 

Individual commenter, FTC–2023–0033–0109. 

365 Individual commenter, FTC–2023–0033–0403. 

366 ‘‘Unsubscribing should be easier than 

subscribing.’’ Individual commenter, FTC–2023– 

0033–0005. Accord Individual commenter, FTC– 

2023–0033–0021 (same); Anonymous commenter, 

FTC–2023–0033–0040 (‘‘I am in favor of making it 

easier to discontinue services.’’); Individual 

commenter, FTC–2023–0033–0107 (‘‘Canceling a 

subscription should be easier that setting up the 

subscription.’’). 

367 Individual commenter, FTC–2023–0011 (‘‘It 

should be very easy to cancel a subscription, 

artificially creating difficulty or hurdles only serves 

to hurt the consumer of a service as well as a 

company’s image and deplete trust in a brand or 

service.’’); Individual commenter, FTC–2023–0033– 

0036 (‘‘It should be very easy to cancel a 

subscription!!!!!’’). 

368 Individual commenter, FTC–2023–0033–0030; 

Individual commenter, FTC–2023–0033–0035; see 

also Individual commenter, FTC–2023–0033–0188 

(‘‘If you sign up online, you should be able to 

cancel online. If it took one click to join, it should 

take one click to cancel. Kind of like 

‘unsubscribing’ from an email newsletter you don’t 

want to get anymore.’’); Individual commenter, 

FTC–2023–0033–0236 (‘‘When I get an email from 

a politician I’m not interested in there is always an 

unsubscribe button. Why can’t paid subscriptions 

be the same?’’). 

369Controlling the Assault of Non-Solicited 

Pornography and Marketing Act of 2003 (‘‘CAN– 

SPAM Act’’), 15 U.S.C. 7701–7713; 16 CFR part 

316. 

representation . . . appears.’’ 356 To 

obtain a consumer’s express informed 

consent, each disclosure must be clear 

and conspicuous and immediately 

adject to the means of recording the 

consumer’s consent. To meet the clear 

and conspicuous standard as defined in 

the Rule, the disclosure must, among 

other things, ‘‘appear in each language 

in which the representation that 

requires the disclosure appears.’’ 357

(4) The Commission does not modify 

the Rule to require separate consent for 

free trial offers. 

In the NPRM, the Commission invited 

comments on whether the Rule should 

require an additional (or alternative) 

round of consent after the end of a free 

trial offer. As explained in the NPRM, 

if the seller follows the proposed Rule’s 

disclosure and consent requirements, 

consumers should understand they are 

enrolled in, and will be charged for, the 

negative option feature once the free 

trial ends. As discussed above, however, 

several commenters explained with 

enough time between initial enrollment 

and charge after conversion, consumers 

are primed to forget the negative option 

feature.358 The Commission agrees this 

an important issue; however, clear 

upfront disclosures lessen the chance a 

negative option feature may be unfair or 

deceptive. Specifically, clear, accurate 

upfront disclosures reduce the risk of 

deception, and the potential harms 

caused are more likely to be reasonably 

avoidable (i.e., the consumer can simply 

refuse to enter into the contract). That 

said, taking advantage of consumers’ 

‘‘forgetfulness’’ is extremely troubling 

and thus ripe to be addressed by other 

means. 

6. Proposed § 425.6 Simple Cancellation 

(‘‘Click to Cancel’’) 

Section 425.6 of the proposed Rule 

contains several requirements to ensure 

consumers can easily cancel negative 

option features. As explained in the 

NPRM, ‘‘easy cancellation is an 

essential feature of a fair and nondeceptive negative option program,’’ but 

one that has become ‘‘far too often 

illusory.’’ 359 ‘‘If consumers cannot 

easily leave a negative option program, 

the negative option feature is little more 

than a means of charging consumers for 

goods and services they no longer 

want.’’ 360

To prevent unfairly trapping 

consumers in a transaction they do not 

want, the proposed Rule directed sellers 

to provide a cancellation mechanism 

that (1) immediately halts recurring 

charges; (2) is as simple to use as the 

mechanism the consumer used to 

consent to the negative option feature; 

and (3) is readily accessible through the 

same medium the consumer used to 

provide that consent. The Commission 

intended these requirements to erect 

clear guardrails, while providing sellers 

with the flexibility to innovate. 

Therefore, rather than propose specific 

prohibitions, which may lose utility 

over time, or inadvertently provide a 

roadmap for deception, the proposed 

Rule outlined a performance-based 

standard mapping the contours of what 

constitutes a simple mechanism, 

without overly prescriptive 

requirements. 

(a) § 425.6(a) and (b) Simple Mechanism 

Required for Cancellation; and Simple 

Mechanism at Least as Simple as 

Initiation 

(1) Summary of Comments 

Proposed § 425.5(a) and (b) required a 

fast and easy cancellation mechanism 

that, at minimum, allows the consumer 

to cancel as easily as they enrolled in 

the program. The Commission received 

thousands of comments in support of 

this provision, with individual 

consumers uniformly expressing their 

desire for a simple easy to use 

cancellation mechanism.361 Such 

comments included: ‘‘If you signed up 

online, you should be able to cancel 

online. If it took one click to join, it 

should take one click to cancel;’’ 362 ‘‘I 

would like the option to cancel my 

subscriptions, [and] offers online just as 

easily as it was to sign up;’’ 363 ‘‘As more 

and more services enter online use, it is 

ridiculous that consumers have to jump 

through so many hoops to cancel 

services when it is so easy to sign up for 

them;’’ 364 and ‘‘Consumers need the 

one-click option.’’ 365

Some commenters suggested 

unsubscribing should be easier than 

enrolling,366 and others, ‘‘very easy.’’ 367

Indeed, several advocated for an 

‘‘Unsubscribe link,’’ 368 similar to those 

available under the CAN–SPAM Act.369

Numerous commenters complained they 


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370See, e.g., Individual commenter, FTC–2023– 

0033–0068; Individual commenter, FTC–2023– 

0033–0086; Individual commenter, FTC–2023– 

0033–0203 (‘‘Recently, I had to start a dispute case 

with my credit card company because I had 

subscribed to a service and there was no way to 

cancel that service.’’); Individual commenter, FTC 

2023–0033–0211; Individual commenter, FTC– 

2023–0033–0225 (had new card issued); Individual 

commenter, FTC–2023–0033–0275 (disputed the 

charge and cancelled card); Individual commenter, 

FTC–2023–0033–0311 (cancelled credit card); 

Individual commenter, FTC–2023–0033–0320 

(disputed charge); Individual commenter, FTC– 

2023–0033–0501 (terminated credit card); 

Individual commenter, FTC–2023–0033–1134 

(cancelled credit card). 

371See, e.g., Individual commenter, FTC–2023– 

0033–0256; Individual commenter, FTC–2023– 

0033–0408 (‘‘common sense’’); Individual 

commenter, FTC–2023–0033–0431 (‘‘no brainer’’); 

Individual commenter, FTC–2023–0033–0586 (‘‘no 

brainer’’). 

372 Individual commenter, FTC–2023–0033–0232; 

Individual commenter, FTC–2023–0033–0459 (‘‘I 

once lost hundreds of dollars because I could not 

find how to cancel.’’); Individual commenter, FTC– 

2023–0033–0509; Individual commenter, FTC– 

2023–0033–0232 (‘‘I’m currently trapped in at least 

three subscriptions that are nearly impossible to 

cancel, costing me hundreds of dollars per year.’’); 

Individual commenter, FTC–2023–0033–0509; 

Individual commenter, FTC–2023–0033–0825 (‘‘I 

have wasted hundreds of dollars for things that 

automatically renewed as a result of not being able 

to figure out easily how to cancel.’’); Individual 

commenter, FTC–2023–0033–0572; Individual 

commenter, FTC–2023–0033–0697 (‘‘I have been 

caught up in just this very unfair practice where 

I’ve been lured in and can’t get out—to the tune of 

hundreds of dollars that I don’t have.’’); see also 

Public Interest Groups, FTC–2023–0033–0880. 

373See, e.g., Individual commenter, FTC–2023– 

0033–029 (‘‘Please implement this necessary rule to 

protect consumers and save us hours on the phone 

cancelling services we signed up for with one click 

online.’’); Anonymous commenter, FTC–2023– 

0033–0040 (‘‘My negative experience was that it 

was a simple ‘click’ on-line to sign up for a service 

but to cancel same service it took three phone calls 

and hours of my time.); Individual commenter, 

FTC–2023–0033–0084 (‘‘I spent over two hours of 

my time trying to cancel the subscription.’’); 

Individual commenter, FTC–2023–0033–0106 (‘‘I’ve 

definitely lost at least 30 hours of my life dealing 

with insufferable ‘retention specialists,’ all of whom 

should be ashamed of what they do.’’); Individual 

commenter, FTC–2023–0033–0431; Individual 

commenter, FTC–2023–0033–0385 (‘‘This is not a 

bot generating a letter; it’s an actual person, and I 

want to register strong support for the one Click 

rule you are considering. I have wasted hours trying 

to deal with customer service, whose only goal is 

to keep me on board.’’); Individual commenter, 

FTC–2023–0033–0672 (‘‘It’s about time! Trying to 

unsubscribe can waste many hours, induce stress, 

result in unwanted subscription or cancellation 

fees, and leave personal data subject to abuse.’’); 

Individual commenter, FTC–2023–0033–0642 

(‘‘There needs to be a substantial penalty when a 

service is requested to be cancelled, but the charges 

continue. I dropped my TV service from Comcast 

3 months ago and they continue to charge me. Every 

time I need to re-contact them I waste an hour.’’). 

374 Individual commenter, FTC–2023–0033–0422 

(‘‘Implementing this consumer-protection rule has 

the potential to save American consumers millions 

of dollars, and prevent unscrupulous companies 

from using byzantine cancellation procedures to 

squeeze unwarranted funds out of their 

customers.’’); Individual commenter, FTC–2023– 

0033–0233 (‘‘I had to navigate an endless labyrinth 

of dark-patterned links in order to cancel an 

Amazon Prime subscription that took me one click 

to sign up for.’’); Individual commenter, FTC–2023– 

0033–0482 (‘‘They make it a labyrinth of obscure 

phrases and if you don’t know to click on just the 

right one, you’ll never be able to cancel.’’). 

375Law Professors, FTC–2023–0033–0861; see 

also State AGs, FTC–2023–0033–0886 (‘‘state 

attorneys general strongly endorse the FTC’s efforts 

to ensure that consumers enrolled in subscription 

services or other negative option plans are 

continuing to pay for those plans because they want 

to maintain their subscriptions, and not because it 

is too much trouble to cancel.’’). 

376PDMI, FTC–2023–003–0864; ACT App 

Association, FTC–2023–0033–0874 (elusive 

language); IAB, FTC–2023–0033–1000 (unclear how 

to measure simplicity). 

377Chamber, FTC–2023–0033–0885 (‘‘ambiguous 

and hard to implement requirement); NRF, FTC– 

2023–0033–1005 (as simple as not defined and no 

examples). 

378ACT App Association, FTC–2023–0033–0874. 

The Commission does indeed define ‘‘simple 

mechanism’’ through the requirements of § 425.6, as 

well as through existing caselaw and the 2021 

Enforcement Policy Statement. See n.385. 

379ESA, FTC–2023–0033–0867; IHRSA, FTC– 

2023–0033–0863; Chamber, FTC–2023–0033–0885; 

BSA, FTC–2023–0033–1015. 

380 IAB, FTC–2023–0033–1000. The Commission 

addresses IAB’s prevalence assertions elsewhere. 

See section VII.A. 

381Beyond the near universal support by 

consumers and consumer advocacy groups, some 

trade groups also supported the goal of ensuring 

consumers have a quick and easy mechanism to 

cancel. RILA, FTC–2023–0033–0883; see also Sirius 

XM, FTC–2023–0033–0857 (‘‘All parties want an 

easy-to-use and an accessible method of 

cancellation’’); ZoomInfo, FTC–2023–0033–0865 

(‘‘We concur with the FTC’s recognition that 

negative option terms, often concealed in ‘fine 

print’, can be difficult for consumers to negotiate or 

even to comprehend fully, and that canceling these 

contracts can be unfairly burdensome.’’). 

382Some commenters asked for clarification 

regarding whether the requirement under § 425.6(a) 

would also immediately cancel the entire contract. 

See, e.g., N/MA (‘‘The FTC should also clarify that 

the ‘‘Click to Cancel’’ proposal applies only to the 

negative option portion of a subscription and not 

to the entire subscription.’’). The language of the 

Rule is clear—cancellation under the Rule applies 

only to the negative option portion of the contract, 

and not the entire contract. Section 425.6 (‘‘it is 

violation of this Rule . . . for the negative option 

seller to fail to provide a simple mechanism for a 

consumer to cancel the negative option feature’’). 

Thus, when a consumer cancels, all terms and 

conditions continue until the expiration of the 

contract or agreement. 

383BSA specifically requested the Commission 

revise subsection (a) to the following: ‘‘We suggest 

revising this language to clarify the intended result 

by stating the obligation is ‘to cancel the negative 

option feature and immediately stop any recurring 

charges for the good or service.’ ’’ BSA, FTC–2023– 

0033–1015. However, this change could create 

ambiguity regarding application of the subsection to 

the initiation of charges under free- and fee-to-paid 

conversions. Accordingly, the Commission will not 

incorporate the suggested change. 

384See, e.g., EPS, 86 FR 60822; FTC v. FloatMe 

Corp., No. 5:24–cv–00001 (W.D. Tex. 2024); United 

States v. Cerebral, Inc., No. 1:24–cv–21376 (S.D. 

Fla. 2024); FTC v. Bridge It, Inc., No. 1:23–cv–09651 

(S.D.N.Y. 2023); FTC v. Vonage Holdings Corp., No. 

3:22–cv–06435 (D.N.J. 2022); FTC v. Benefytt 

Techs., Inc., No. 8:22–cv–01794 (M.D. Fla. 2022); 

FTC v. First Am. Payment Sys., No. 4:22–cv–00654 

(E.D. Tex. 2022); United States v. MyLife.com, Inc., 

No. 2:20–cv–6692 (C.D. Cal. 2020); FTC v. 

RagingBull.com, LLC, No. 1:20–cv–03538 (D. Md. 

2020); FTC v. Age of Learning, Inc., No. 2:20–cv– 

07996 (C.D. Cal 2020); FTC v. Match Grp., Inc., No. 

3:19–cv–02281 (N.D. Tex. 2019); FTC v. Cardiff, No. 

5:18–cv–02104 (C.D. Cal. 2018); FTC v. AdoreMe, 

Continued 

often have to resort to disputing the 

charge with credit card companies (or 

cancelling the card altogether) because 

cancellation is so difficult or 

impossible.370 Additionally, 

commenters described the simple 

cancellation mechanism requirements 

as a ‘‘no brainer,’’ ‘‘common sense,’’ and 

‘‘only fair’’ to consumers.371 These and 

others commenters complained of the 

hundreds of dollars 372 and hours 373

wasted on unused and unwanted 

products and services they were not 

effectively able to cancel due to 

byzantine cancellation procedures.374

As summarized by the Berkeley 

Consumer Law Center, ‘‘requiring the 

mechanism of cancellation be as simple 

as enrollment’’ will minimize ‘‘overly 

complex cancellation processes with 

multiple steps,’’ and prevent sellers 

‘‘from trapping consumers in 

automatically renewing subscriptions 

through obstacles created by tedious 

processes or confusion.’’ 375

Sellers and trade organizations argued 

the proposed requirements were ‘‘too 

vague.’’ 376 For instance, PDMI asserted 

the requirement that the simple 

cancellation mechanism be as easy to 

use as the one used to initiate the 

transaction provides no clear guidance 

on when a transaction is ‘‘initiated.’’ 

Several industry and trade groups 

echoed this comment, contending ‘‘as 

easy as’’ is a difficult, and often 

subjective, standard.377 Other 

businesses complained the proposed 

Rule fails to define ‘‘simple 

mechanism’’ 378 and making 

cancellation as easy as enrollment was 

not possible because they serve different 

purposes.379 IAB asserted the proposed 

requirements were overbroad in relation 

to the prevalent acts or practices the 

Commission identified.380

(2) Analysis 

Considering the overwhelming 

support for a simple cancellation 381

mechanism that immediately halts 

charges,382 and given substantial 

evidence supporting the need for such 

mechanism to prevent unfair and 

deceptive acts and practices, the 

Commission retains proposed § 425.6(a) 

and (b).383 The Commission disagrees 

with commenters’ argument that the ‘‘as 

easy as’’ standard is vague. The 

Commission has provided considerable 

guidance on what constitutes a simple 

or ‘‘easy’’ cancellation mechanism 

through numerous cases and its 2021 

Enforcement Policy Statement.384


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Inc., No. 1:17–cv–09083 (S.D.N.Y. 2017); FTC v. 

AAFE Prods. Corp., No. 3:17–cv–00575 (S.D. Cal. 

2017); FTC v. JDI Dating, Ltd., No. 1:14–cv–08400 

(N.D. Ill. 2014). 

385Some commenters raised the concern that 

sellers might create complicated signup procedures 

to justify complex cancellation mechanisms. ESA, 

FTC–2023–0033–0867; State AGs, FTC–2023–0033– 

0886; IAB, FTC–2023–0033–1000. As pointed out 

by the State AGs sellers must comply with all 

requirements of a simple cancellation mechanism, 

including that consumers can promptly effectuate 

cancellation through an accessible means. 

386Commenters insisted that reasonable 

authentication and verification procedures be 

allowed prior to cancellation to ensure that only 

authorized persons are making changes to an 

account. NFIB, FTC–2023–0033–0789; IHRSA, 

FTC–2023–0033–0863; ESA, FTC–2023–0033–0867; 

N/MA, FTC–20230033–0873; RILA, FTC–2023– 

0033–0883; ANA, FTC–2023–0033–1001. 

387See, e.g., MIA, FTC–2023–0033–1008. 

388Berkeley Consumer Law Center, FTC–2023– 

0033–0855; RocketMoney, FTC–2023–0033–0998; 

Anonymous commenter, FTC–2023–0033–0024; 

Individual commenter, FTC–2023–0033–0411; 

Individual commenter, FTC–2023–0033–0850; 

Individual commenter, FTC–2023–0033–0861; 

Individual commenter, FTC–2023–0033–0888; 

Anonymous commenter; FTC–2023–0033–0134; 

Individual commenter, FTC–2023–0033–0326; 

Individual commenter, FTC–2023–0033–0778. 

389See, e.g., Cal. Bus. & Prof. Code § 17602(d)(3); 

Colo. Rev. Stat. § 6–1–732(2)(d)(I)(B). 

390USTelecom, FTC–2023–0033–0876 

(‘‘expressly allow’’ business to engage in privacy 

and data security measures prior to cancellation); 

ANA, FTC–2023–0033–1001. 

391For online cancellation, § 425.6(c)(1) of the 

proposed Rule required sellers to provide a simple 

cancellation mechanism through the same medium 

consumers used ‘‘to purchase the negative option 

feature.’’ 

392The Commission also will make a conforming 

change to add ‘‘consent’’ in section 425.6(c)(1). 

393See, e.g., Individual commenter, FTC–2023– 

0033–0072 (‘‘I would like a rule that requires all 

subscriptions to be available to cancel through the 

same means as they were initiated, whether that is 

online, in person, phone, mail, or chat.’’); 

Individual commenter, FTC–2023–0033–0252 (‘‘the 

method provided for signing up for a service must 

also be provided for cancelling the same service, be 

just as easy to find, and require no more steps than 

it took to sign up.’’). 

394See, e.g., NCTA, FTC–2023–0033–0858; PDMI, 

FTC–2023–0033–0864; CTA, FTC–2023–0033– 

0997; ANA, FTC–2023–0033–1001. See also Wilson 

Sonsini Goodrich & Rosati on behalf of certain of 

its alarm company clients (‘‘Sonsini Alarm 

Clients’’), FTC–2023–0033–0860 (alarm companies 

should be able to speak to the customers to verify 

identity and confirm cancellation intent); N/MA– 

FTC–2023–0033–0873 (A ‘‘one click’’ cancellation 

requirement for an entire subscription, especially 

absent some form of authentication, could also lead 

to accidental and/or malicious cancellations.); NRF, 

FTC–2023–0033–1005 (data suggests that one-clickcancellation functions frequently cause accidental 

cancellations). 

395See, e.g., Sirius XM, FTC–2023–0033–0857; N/ 

MA, FTC–2023–0033–0873; State AGs, FTC–2023– 

0033–0886. 

396State AGs, FTC–2023–0033–0886. 

397 Id. 

398CDI, FTC–2023–0033–0887. 

399CTA, FTC–2023–0033–0997; IAB, FTC–2023– 

0033–1000. 

400 IAB, FTC–2023–0033–1000. 

Moreover, the ‘‘as easy as’’ standard is 

even clearer in context, i.e., a flexible 

measure that ensures consumers have 

similar cancellation and consent 

experiences in terms of time, burden, 

expense, and ease of use, among other 

things.385 The Commission is aware 

these experiences may not always be 

perfectly symmetrical. Consumers may 

have to verify or authenticate their 

identity, for instance,386 or they may be 

asked to confirm their intent to 

cancel.387 However, reasonable 

verification, authentication, or 

confirmation procedures should not 

create distinctly asymmetrical 

experiences, particularly if the 

cancellation mechanism is located 

within account or user settings secured 

by authentication requirements for 

access. Any authentication, verification, 

or confirmation procedure that creates 

unreasonable asymmetry runs afoul of 

section 5 of the FTC Act and the Rule. 

Moreover, given the extensive record 

and the Commission’s experience with 

sellers using verification and 

authentication tools to thwart or delay 

cancellation,388 the Commission 

declines to create a safe harbor for these 

activities as some States have 389 and as 

some commenters requested.390

Nevertheless, as some commenters 

point out, the proposed initiation or 

purchase date trigger may provide 

insufficient clarity.391 Not all negative 

option features begin with a purchase 

(e.g., free trials), and when a transaction 

is initiated is subject to interpretation or 

possible manipulation. Given this 

ambiguity, businesses attempting to 

comply with the proposed Rule may 

have difficulty, and those attempting to 

evade the proposed Rule may find 

loopholes with the proposed initiation 

or purchase date trigger. Thus, the 

Commission revises § 425.6(b) 392 to 

require the simple cancellation 

mechanism be ‘‘as easy as’’ the 

mechanism the consumer used ‘‘to 

consent’’ to the negative option feature, 

rather than ‘‘initiate’’ or ‘‘purchase’’ the 

feature. The moment of consent avoids 

the lack of clarity the terms ‘‘purchase’’ 

and ‘‘initiate’’ introduce and clarifies 

the action to which the cancellation 

must be compared. 

(b) Proposed § 425.6(c) Minimum 

Requirements for Simple Mechanisms 

(1) Summary of Comments 

The proposed Rule required sellers to 

provide a simple cancellation 

mechanism through the same medium 

(internet, phone, in-person) the 

consumer used to consent to the 

negative option feature. Almost 

uniformly, consumers supported this 

requirement.393 However, a number of a 

trade groups disagreed, arguing, as 

explained below, the requirement is too 

prescriptive, or could lead to accidental 

or inadvertent cancellation.394 Instead, 

these commenters suggested the 

Commission allow consumers to choose 

their cancellation medium (e.g., based 

on ‘‘consumer expectations,’’ 

convenience, or common use by the 

seller).395

Consumer groups and law 

enforcement asked the Commission to 

add minimum requirements to the 

simple cancellation mechanism. For 

instance, the State AGs asked the 

Commission to include the various 

requirements stated in the 2021 

Enforcement Policy Statement, e.g., 

require negative option sellers ‘‘not [to] 

erect unreasonable barriers to 

cancellation or impede the effective 

operation of promised cancellation 

procedures, and must honor 

cancellation requests that comply with 

such procedures.’’ 396 They also urged 

the Commission to adopt language from 

New York’s statute, which provides 

simple cancellation mechanisms must 

be ‘‘cost effective, timely, and easy to 

use.’’ 397 Additionally, the Center for 

Data Innovation asked the Commission 

to create a working group to define 

simple mechanism further, including 

best practices for businesses.398

Finally, some commenters suggested 

the record lacks evidence that it would 

be unfair or harmful to consumers to 

have a cancellation process different 

from the sign-up process.399

Accordingly, they argued promulgating 

a trade regulation rule requiring such 

symmetry is beyond the Commission’s 

authority. Further, IAB argued the 

Commission cannot create new 

requirements defining simple 

cancellation methods beyond ROSCA’s 

simplicity standard, i.e., that sellers 

provide simple mechanisms to stop 

recurring charges, because Congress 

already decided the appropriate 

standard.400

(a) Proposed § 425.6(c)(1): Online 

Cancellation 

Section 425.6(c)(1) of the proposed 

Rule specifically addressed online 

cancellation, requiring sellers to provide 

a cancellation mechanism over the same 

website or web-based application the 

consumer used to consent. Thousands 

of commenters repeated the mantra: ‘‘If 

you signed up online, you should be 

able to cancel online,’’ noting they often 

face hurdles finding a cancellation 

mechanism, and then must call and 


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401 Individual commenter, FTC–2023–0033–0215 

(‘‘If you signed up online, you should be able to 

cancel online. If it took one click to join, it should 

take one click to cancel.’’); Individual commenter, 

FTC–2023–0033–0847; Anonymous commenter, 

FTC–2023–0033–0040 (‘‘My negative experience 

was that it was a simple ‘click’ on-line to sign up 

for a service but to cancel same service it took three 

phone calls and hours of my time. If I can sign up 

with a ‘click’ then I SHOULD be able to cancel with 

a ‘click.’ ’’). 

402RILA, FTC–2023–0033–0883. 

403ESA, FTC–2023–0033–0867; ANA, FTC– 

2023–0033–1001. 

404NCTA, FTC–2023–0033–0858; PDMI, FTC– 

2023–0033–0864; CTA, FTC–2023–0033–0997; 

ANA, FTC–2023–0033–1001. 

405See, e.g., ESA, FTC–2023–0033–0867; IAB, 

FTC–2023–0033–1000. 

406See, e.g., IAB, FTC–2023–0033–1000; MIA, 

FTC–2023–0033–1008; see also RILA, FTC–2023– 

0033–0883 (enrollment online, e.g., internet-based 

mobile applications, should be allowed through 

seller’s website). 

407See, e.g., ESA, FTC–2023–0033–0867. 

408USTelecom, FTC–2023–0033–0876; CTIA, 

FTC–2023–0033–0866 (‘‘imperative that businesses 

are able to have a live representative speak with a 

customer seeking to cancel, regardless of the 

medium used to sign up’’); NCTA, FTC–2023– 

0033–0858; (‘‘Whatever these consumers’ reasons 

for seeking to cancel or modify services, in most 

instances they are best served by speaking with a 

live agent, even if they enrolled online.’’); see also 

Chamber, FTC–2023–0033–0885 (subscriptions to 

multiple products or services ‘‘require[ ] more time 

and personal assistance to address when a customer 

seeks to cancel only one of such related products 

or services’’). 

409Sonsini Alarm Clients, FTC–2023–0033–0860; 

see also Joint Alarm Industry Comments—ESA, 

TMA, SIA and AICC, FTC–2023–0033–1014 (asking 

for clarification that alarm companies can require 

written or verbal confirmation of online 

cancellation requests). The concerns raised by these 

industries are likely an artifact of the Saves 

provision, which, as proposed, could be interpreted 

to prevent verification procedures and cancellation 

intent. The Commission addresses these concerns 

in section VII.B.6.c. 

410N/MA, FTC–2023–0033–0873. 

411Law Professors, FTC–2023–0033–0861. 

412State AGs, FTC–2023–0033–0886. 

413 Individual commenter, FTC–2023–0033–0399 

(‘‘Even if I didn’t sign up online, terminating, a 

membership in person isn’t always possible. Lock 

down during Covid being a prime example.’’). 

414 Individual commenter, FTC–2023–0033–0677 

(‘‘Companies are absolutely being deceptive about 

their practices when it comes to canceling a service, 

including their initial pitch to ‘Cancel anytime!’ 

only for you to find out that canceling requires you 

to go in person to a business in a place you might 

not even live anymore’’). 

415 Individual commenter, FTC–2023–0033–0741 

(‘‘[m]any places . . . require you to go in person to 

cancel—they won’t even let you do it over the 

phone! This harms anyone that may have trouble 

leaving the house regularly, including disabled 

folks and parents of small children and those caring 

for older or ailing family members.’’). See also 

TechFreedom, FTC–2023–0033–0872 (‘‘Returning 

to the in-person venue where the initial sale 

occurred may be inconvenient, or even impossible, 

for the consumer.’’); Individual commenter, FTC– 

202–0033–1141 (‘‘Sometimes an unexpected move 

or unforeseen circumstances make it impossible to 

cancel in person. I would like to see an option to 

be able to cancel remotely, even if the subscription 

was purchased on site.’’). 

spend significant time on the telephone 

to cancel their subscriptions.401

In contrast, RILA suggested 

consumers would not always expect to 

find a cancellation function through the 

same online medium the consumer used 

to enroll. ‘‘For example, contracts are 

. . . increasingly concluded online 

through third parties or via social media 

apps. Regardless of how a customer 

initially signs up, once she/he 

establishes a purchasing arrangement 

with a seller, the customer will logically 

look to the seller to cancel.’’ 402 Several 

commenters agreed, stating where a 

consumer enrolls through a third party, 

or through an IoT device, the consumer 

may naturally look to the seller with 

whom the consumer has the 

agreement.403

Similarly, trade groups, such as NCTA 

and PDMI, argued mandating consumer 

cancellation through the same website 

or web-based application the consumer 

used to initiate the transaction is too 

prescriptive.404 Several of these 

commenters asserted the proposed 

requirement is unnecessary and 

contrary to consumer expectations.405

They further contended when 

consumers enroll online, any online 

cancellation mechanism should be 

adequate.406 Further, these commenters 

suggested it may not be possible to offer 

the same website or web-based 

application due to contractual 

obligations and limitations imposed by 

third parties.407

Additionally, broadband, wireless, 

and streaming groups, such as NCTA 

and USTelecom, suggested the samemedium requirement is particularly 

troublesome for their industries because 

consumers often subscribe to multiple, 

or bundled, services, rendering 

cancellation online through a single 

click difficult or impossible. These 

industries posited consumers often do 

not, in fact, want to cancel, but rather 

seek to downgrade or modify services. 

Therefore, requiring a consumer to 

speak to a live agent best accomplishes 

this goal, regardless of how the 

consumer enrolled.408

Alarm companies raised a similar 

concern, i.e., there are no safeguards to 

ensure the consumer intended to cancel 

(rather than, e.g., unsubscribe from 

marketing emails) when cancelling 

online. They also emphasized the 

importance of verifying a consumer’s 

identity prior to cancellation. As 

explained by a commenter representing 

various alarm company clients, alarm 

companies’ ‘‘cancellation procedures 

are designed to prevent inadvertent or 

malicious disabling of alarm monitoring 

services, often by directing consumers 

to call trained customer support 

representatives who can verify the 

consumer’s identity via their secure 

passcode and ensure any changes made 

to the account are intentional and fully 

informed.’’ 409

(b) Proposed § 425.6(c)(2): Telephone 

Cancellation 

Proposed § 425.6(c)(2) addressed 

situations in which sellers obtain 

consumer consent by telephone. In 

these situations, the proposed Rule 

required sellers to provide a telephone 

number to consumers and ‘‘assure’’ all 

calls are answered promptly during 

‘‘normal business hours’’ and are no 

more costly than the call to enroll. 

Several commenters asked the 

Commission to modify this section. 

Specifically, N/MA asked that sellers be 

allowed to confirm telephone 

cancellations through email 

verification.410 A group of law 

professors asked the Commission to 

require sellers to answer cancellation 

calls in ‘‘comparable timeframe to signup calls.’’ 411 They also suggested 

telephone answering systems should not 

be limited to normal business hours if 

they are entirely automated. The State 

AGs further asked the Commission to 

incorporate the guidance for telephone 

cancellation from the 2021 Enforcement 

Policy statement, for example, ensuring 

‘‘the calls are not lengthier or otherwise 

more burdensome than the telephone 

call the consumer used to consent to the 

negative option feature,’’ and 

prohibiting sellers from ‘‘hang[ing] up 

on consumers who call to cancel; 

plac[ing] them on hold for an 

unreasonably long time; provid[ing] 

false information about how to cancel; 

or misrepresent[ing] the reasons for 

delays in processing consumers’ 

cancellation requests.’’ 412

(c) Proposed § 425.6(c)(3): In-person 

Cancellation 

For in-person sales, proposed 

§ 425.6(c)(3) required sellers to offer 

online or telephone call cancellation 

mechanisms in addition to the same inperson mechanism, where practical. The 

proposed Rule further required sellers 

not make telephone cancellation more 

costly than the method used to consent 

to the negative option feature. 

Individual consumers identified the 

many ways in which demanding inperson cancellation is unfair. For 

instance, they observed it may not 

always be possible to cancel in person, 

as was true during the COVID 

pandemic,413 after a consumer moves 

from the area,414 or for people with 

young children or who have difficulty 

leaving their home.415 Others 


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416See, e.g., Individual commenter, FTC–2023– 

0033–0510 (‘‘I had to go in person 3 different times 

because the manager wasn’t there so to cancel it’’). 

417 Individual commenter, FTC–2023–0033–0007 

(‘‘I work dispute resolutions for a bank. I see so 

many cases where someone is trying to cancel 

something like a gym membership and, while they 

can sign up in person, they for some reason have 

to mail a certified letter to the [company’s] home 

office. That has always seemed unreasonable and 

deliberately contrived.’’). 

418 ICA, FTC–2023–0033–1142. ICA’s comment 

seems to suggest a misunderstanding that the Rule 

would require both telephone and online 

cancellation for in-person consent. It does not. A 

business may elect either online or telephone (or 

both), but there must be at least one mechanism in 

addition to in-person cancellation. 

419EPS, 86 FR 60823; see also NPRM, 88 FR 

24728 (explaining the simple cancellation 

mechanism proposed in the Rule should remove 

barriers, such as unreasonable hold times or 

verification requirements). 

420See, e.g., N/MA, FTC–2023–0033–0873 

(subscribers should be allowed to choose method 

most convenient; subscribers who sign up by mail 

may prefer to cancel online or by telephone, and 

consumers who subscribed by telephone may prefer 

to cancel online); Sirius XM, FTC–2023–0033–0857 

(‘‘For example, requiring a customer to use direct 

mail to cancel if the customer used direct mail to 

accept a subscription offer would be inconvenient 

for the customer and not the customer’s expected 

or desired means for cancellation. Instead, the 

cancellation method should be an easy-to-use 

mechanism for a consumer to stop recurring charge 

which would closely track consumer expectations 

and allow for changes in technology.’’); State AGs, 

FTC–2023–0033–0886 (‘‘We respectfully suggest 

requiring sellers to allow all consumers to cancel 

through any medium that the seller uses to sell 

subscriptions or memberships, regardless of the 

medium through which that particular consumer 

signed up.’’). 

421See generally section VII.A. 

422 15 U.S.C. 57a(a)(1)(B). 

423NPRM, 88 FR 24716 n.9. Although, as stated 

in the NPRM, Congress did not direct the FTC to 

promulgate implementing regulations, it certainly 

did not preclude them, and the language contained 

in ROSCA confirms the FTC’s authority to do so. 

15 U.S.C. 8404(a) (‘‘Violation of this chapter or any 

regulation prescribed under this chapter shall be 

treated as a violation of a rule. . . .’’); see also id. 

8404(b) (‘‘Any person who violates this chapter or 

any regulation prescribed under this chapter’’ shall 

be subject to penalties); id. 8404(c) (‘‘Nothing in this 

section shall be construed to limit the authority of 

the Commission under any other provision of 

law.’’). 

424 Individual commenter, FTC–2023–0033–0003 

(‘‘When signing up, I didnt talk to a single 

individual. So its fair that when cancelling, I should 

not have to talk to a single individual.’’); Individual 

commenter, FTC–2023–0033–0006 (was forced to 

call ‘‘and speak with several agents’’ because unable 

to cancel online); Anonymous commenter, FTC– 

2023–0033–0044 (shouldn’t be forced to make a 

phone call and sit on hold for hours if signed up 

online); Individual commenter, FTC–2023–0033– 

0072 (fair to consumers to allow consumers to 

cancel through same means as they were initiated); 

Individual commenter, FTC–2023–0033–0087 (‘‘I 

think any offer you can buy with a click should also 

be an offer to unsubscribe with a click’’; having to 

call instead is a scam); Anonymous commenter, 

FTC–2023–0033–0095 (‘‘I would like to specify that 

[company] did not allow to terminate the account 

online. They specifically requested a phone call, 

which they then ignored for as long as possible. 

This practice is unfair and deceptive and needs to 

be outlawed.’’); Anonymous commenter; FTC– 

2023–0033–0097 (FTC should ban practice of 

companies only offering cancellation via phone 

call, despite not requiring a phone call for signup); 

Individual commenter, FTC–2023–0033–0274 

(‘‘having to call the company to cancel when the 

party clicked on the website is forced verbal 

speech’’); Individual commenter, FTC–2023–0033– 

0356 (‘‘If you signed up online, you should be able 

to cancel online. If it took one click to join, it 

should take one click to cancel. I am tried [sic] of 

calling some call center, waiting on hold, and then 

having someone go through a long script about why 

I should not cancel. Generally make it as easy to 

cancel as to sign up.’’); Individual commenter, 

FTC–2023–0033–0379 (‘‘I have now been charged 

for a full month because I have to call and speak 

complained they showed up numerous 

times in person, only to be told they 

could not cancel because the manager 

was not available.416 One commenter 

complained sellers demanded 

consumers cancel by certified mail if 

they originally consented in person.417

In contrast, two trade associations 

requested the Commission allow sellers 

to require consumers to cancel in person 

if they signed up in person. These 

commenters argued such a limitation is 

appropriate due to the unique 

challenges of their industries. For 

example, IHRSA, which represents the 

health and fitness industry, stated, ‘‘it is 

appropriate for a brick-and-mortar 

business’’ to require customers to cancel 

in person ‘‘to verify their identity.’’ The 

International Carwash Association 

(‘‘ICA’’) stated some of its members sell 

products and services exclusively in 

person; therefore, it asked the 

Commission to not ‘‘force’’ these small 

business owners ‘‘to set up an online 

marketplace’’ to process cancellations if 

the seller does not already have an 

online presence.418

(2) Analysis 

(a) The Commission retains the 

general ‘‘same medium’’ requirements 

of § 425.6(c). 

Based on the record, the final Rule 

retains the general requirements 

proposed in § 425.6(c); specifically, the 

negative option seller must provide a 

simple cancellation mechanism through 

the same medium (such as internet, 

telephone, mail, or in-person) the 

consumer used to consent to the 

negative option feature. Further, the 

final Rule retains § 425.6(a) that requires 

sellers to provide consumers with a 

simple mechanism to immediately stop 

charges that is cost-effective, timely, and 

easy to use. Such a mechanism cannot 

include ‘‘unreasonable barriers to 

cancellation or impede the effective 

operation of promised cancellation 

procedures.’’ 419 This provision makes 

adding language from the 2021 

Enforcement Policy Statement or the 

New York statute unnecessary because 

the simple mechanism provision 

already includes it. Further, several 

commenters asked the Commission to 

allow consumers to choose additional, 

alternate means of cancellation.420 This 

modification, however, is also 

unnecessary. The ‘‘same medium’’ 

requirement presents a floor, not a 

ceiling. That is, it only requires 

businesses to offer consumers the ability 

to cancel in the manner they were able 

to sign up. Sellers are free to provide 

additional cancellation mechanisms, 

giving consumers choices. 

Moreover, despite some commenters’ 

assertions to the contrary, the 

Commission has clear authority to issue 

a rule requiring sellers to offer 

cancellation through the same medium 

as enrollment. As detailed in section 

VII.A, there is a substantial record 

demonstrating the negative option 

practices covered by this Rule are unfair 

or deceptive, prevalent, and have 

caused significant consumer harm.421

Moreover, Magnuson-Moss empowers 

the Commission to promulgate 

requirements designed to prevent any 

unfair or deceptive practice it identifies 

with specificity.422 By promulgating a 

rule that prevents sellers from making 

cancellation unreasonably difficult, the 

Commission has done so here. Further, 

while ROSCA does not provide for APA 

rulemaking, it does not limit the 

Commission’s authority to issue a trade 

regulation rule.423 In fact, the 

Commission’s Negative Option Rule 

predates ROSCA, and the statute does 

not rescind that Rule. 

(b) The Commission modifies the 

requirements of § 425.6(c)(1): Online 

Cancellation. 

In response to comments, the 

Commission makes several changes to 

clarify the online cancellation 

mechanism requirements. First, it 

removes the requirement that, for 

website or web-based applications, 

cancellation must be afforded through 

the same precise means as consent. 

Instead, the final Rule provides the 

simple cancellation must be easy to 

find. Second, the revised provision 

incorporates a definition of ‘‘interactive 

electronic medium’’ in place of 

‘‘internet.’’ Third, the Commission 

excludes cancellation mechanisms 

requiring interaction with a live or 

virtual agent, unless the consumer 

consented to the negative option feature 

through such mechanism. Each 

modification is discussed below. 

(i) The simple cancellation 

mechanism must be easy to find. 

Consumers uniformly opposed having 

to engage with a representative to cancel 

when they could simply click a button 

to enroll.424 They also expressed deep 


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to a representative instead of clicking to cancel.’’); 

Individual commenter, FTC–2023–0033–0443 (‘‘If 

the public is allowed to set up an account online 

we should be allowed to cancel online without ever 

making a phone call. The consumer should have 

more rights than corporations.’’); Individual 

commenter, FTC–2023–0033–0617 (‘‘It is truly 

obnoxious to be able to click to join but have to 

research to find the way to cancel, often involving 

making a phone call and being left on hold.’’); 

Individual commenter, FTC–2023–0033–0716 (‘‘We 

shouldn’t have to call the company to cancel!’’); 

Individual commenter, FTC–2023–0033–0788 

(requiring a call when enrolled online is ‘‘coercive 

and unfair’’); Individual commenter, FTC–2023– 

0033–0822 (‘‘I am sick of having to call a phone 

number to cancel something I signed up for on line, 

and often speaking to someone who is snide, 

sarcastic, or downright rude!’’). 

425 Individual commenter, FTC–2023–0033–0065 

(‘‘Often a company makes it significantly more 

difficult to even find out where or how to cancel 

a subscription.’’); Individual commenter, FTC– 

2023–0033–0024 (‘‘It took a Google search to find 

the right Customer Service number because it was 

hidden or unavailable on the website.’’); Individual 

commenter, FTC–2023–0033–0084 (finally found 

corporate number to cancel trampoline park after 

scouring website for a membership enrolled online); 

see also Individual commenter, FTC–2023–0033– 

0067 (‘‘why are they allowed to sign you up for 

automatic renewal with no way to cancel nothing 

on their web page in order to cancel a 

subscription’’); Individual commenter, FTC–2023– 

0033–0071 (biggest annoyance is that subscriptions 

can be signed up for so easily with a few buttons 

on the remote but nearly impossible to cancel); 

Anonymous commenter, FTC–2023–0033–0108 (‘‘I 

certainly hope this goes through. These companies 

make it incredibly difficult to even find the cancel 

or opt out option.’’); Anonymous commenter, FTC– 

2023–0033–0123 (‘‘Straight forward plain language 

cancelation instructions that are easy to locate 

should be required.’’); Individual commenter, FTC– 

2023–0033–0124 (‘‘Clearly there should be an easy 

way to unsubscribe that is easy to find.’’); 

Individual commenter, FTC–2023–0033–0560 

(cancellation page should be easy to find); 

Individual commenter, FTC–2023–0033–0642 (‘‘If 

you signed up online, you should be able to cancel 

online. If it took one click to join, it should take 

one click to cancel. I have had trouble finding 

where to cancel on multiple subscription services. 

Often, they are confusing on purpose to keep 

customers like me trapped in the payment cycle. 

Some require an email or phone call to a separate 

customer service representative. Cancelling should 

not be harder than signing up for their service.’’); 

Individual commenter, FTC–2023–0033–0685 (‘‘I 

am tired of having to screen grab the fine print to 

figure out my options for cancelling subscriptionsit just shouldn’t be this hard!?!’’); Ashley Sheil on 

behalf of Maynooth University and in collaboration 

with Radboud University, FTC–2023–0033–1006 

(observing that companies may take advantage of 

the ‘‘as easy as’’ requirement, and recommending 

any termination button should be highlighted and 

in an obvious location). 

426See n.385 (citing simple cancellation cases). 

427NPRM, 88 FR 24728 (‘‘On the internet, this 

‘Click to Cancel’ provision requires sellers, at a 

minimum, to provide an accessible cancellation 

mechanism on the same website or web-based 

application used for sign-up.’’). 

428See, e.g., ESA, FTC–2023–0033–0867 (‘‘Such a 

requirement would not be helpful for players 

seeking to cancel a subscription, as in-game is not 

the place that most players would expect to find a 

cancellation ingress.’’); RILA, FTC–2023–0033– 

0883 (‘‘The method that a consumer uses for initial 

sign-up may not be the place where that consumer 

would expect to find a simple cancellation 

function. For example, contracts are also 

increasingly concluded online through third parties 

or via social media apps. Regardless of how a 

customer initially signs up, once she/he establishes 

a purchasing arrangement with a seller, the 

customer will logically look to the seller to cancel 

the arrangement.’’). 

429The Chamber asked the Commission to clarify 

that web-based chat is an appropriate cancellation 

where a consumer signs up online. As is clear from 

the record, unless the seller required the consumer 

to engage with an agent through a web-based chat 

to enroll, the Rule will preclude requiring the 

consumer to do so to cancel. There is substantial 

evidence this asymmetrical practice of requiring 

consumers to engage with agents (live or virtual) for 

cancellation but not enrollment is one of the 

principal methods sellers use to create unfair and 

deceptive cancellation procedures. Accordingly, it 

is appropriate to include limitations within the 

Rule to prevent unscrupulous sellers from using 

such practices. 

430 Individual commenter, FTC–2023–0033–0124 

(‘‘Clearly there should be an easy way to 

unsubscribe that is easy to find.’’); Individual 

commenter, FTC–2023–0033–0252 (‘‘I had been 

thinking of contacting my Governor to suggest just 

such a rule that the method provided for signing up 

for a service must also be provided for cancelling 

the same service, be just as easy to find, and require 

no more steps than it took to sign up.’’); Individual 

commenter, FTC–2023–0033–0560 (‘‘And ensure 

the bill is explicit with requirement to make it 

EASY TO FIND HOW TO REACH the company or 

cancellation page.’’); Individual commenter, FTC– 

2023–0033–0640 (‘‘The Federal Trade Commission 

needs to make it mandatory for companies to have 

an easy to find button to cancel a subscriptions 

-online-.’’); Individual commenter, FTC–2023– 

0033–0784 (‘‘And the cancel button should be easy 

to find and as attractively marketed as an 

opportunity to extend a subscription (font size, 

colors, etc.).’’); Individual commenter, FTC–2023– 

0033–1006 (cancellation should be highlighted and 

in an obvious location). 

431See, e.g., Cal. Bus. & Prof. Code 

§ 1702(d)(1)(A); Conn. Gen. Stat. Ann. § 42–158ff 

(d)(1)(A); N.J. Stat. Ann. § 56:8–42.1.a. 

432See, e.g., Individual commenter, FTC–2023– 

0033–0022 (‘‘Note that subscriptions are by their 

very nature long lasting in time, therefor 

requirements should not just emphasize some fine 

print disclosure at the time of sign up but also it 

should be easy to check back with the company or 

their many layers of subcontractors to cancel at 

anytime in the future.’’). 

433State AGs, FTC–2023–0033–0886. 

434 Id. 

frustration over having to hunt to find 

cancellation mechanisms, usually 

buried deep within a website or in fine 

print on a bill or other 

correspondence.425 The Commission 

has brought numerous cases alleging 

these practices are unfair or 

deceptive.426 The proposed Rule sought 

to prevent these unfair and deceptive 

practices by requiring sellers to provide 

an easily accessible online cancellation 

mechanism to consumers who enrolled 

online.427 As several commenters 

rightly noted, however, consumers may 

not always expect (and it may not 

always be possible) to use the same 

precise means for both enrollment and 

cancellation.428

Accordingly, to clarify the intent of 

the original language and to better 

match consumer expectation with actual 

cancellation procedures, the 

Commission now clarifies that where a 

consumer enrolls online, whether 

through a website, a mobile application, 

chat, email, or messaging, consumers 

must be afforded an equally simple 

online cancellation experience, i.e., one 

that allows them easily to find and use 

the cancellation mechanism.429

Many commenters agreed consumers 

would consider a link or button located 

on a website or within a user’s account 

or device settings to be ‘‘easy to 

find.’’ 430 Providing a clearly-labeled 

cancellation button in a consumer’s 

account or user settings is, thus, one 

example of a simple online cancellation 

mechanism.431 The Commission 

cautions, however, while such a 

mechanism need not be exactly the 

same as the consent mechanism, the 

seller cannot make it more difficult to 

use or find than the consent mechanism. 

For example, the seller cannot 

prominently label the mechanism 

within the account settings but make it 

difficult for consumers to find the 

account settings in the first instance. 

Further, the Commission emphasizes 

that the cancellation mechanism must 

be easy to find at the time the consumer 

decides to cancel. Providing an easy-tofind mechanism at consent does not 

mean the mechanism will be easy to 

find later when the consumer wants to 

cancel, and therefore will not prevent 

unreasonable barriers to cancellation. 

Thus, providing the information 

necessary to find the cancellation 

mechanism at enrollment (as required 

under § 425.4) does not discharge the 

seller’s obligation to ensure cancellation 

is easy to find when most relevant to the 

consumer.432

(ii) ‘‘Interactive electronic medium’’ is 

broadly defined to include all methods 

of electronic communication. 

The State AGs asked the Commission 

specifically to address the requirements 

for cancellation by chat, text messaging, 

and email. The State AGs explained that 

although chat and text are increasingly 

common cancellation mechanisms, they 

share some of the same qualities and 

potential problems as telephone 

cancellation because they require 

interaction with a live or virtual 

customer representative.433 Further, the 

State AGs suggested email should not be 

an acceptable cancellation medium for 

online consent.434

To address these concerns, the 

Commission revises the proposed 

provision to refer to ‘‘interactive 

electronic medium’’ rather than 

‘‘internet.’’ This change clearly includes 

text, chat, and email within the scope of 

online cancellation mechanisms. 


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435See, e.g., Cal. Bus. & Prof. Code § 17602 (‘‘The 

business shall provide a method of termination that 

is online in the form of either of the following: By 

an immediately accessible termination email 

formatted and provided by the business that a 

consumer can send to the business without 

additional information.’’); Conn. Gen. Stat. Ann. 

§ 42–158ff (an electronic mail message from the 

business to the consumer, which is immediately 

accessible by the consumer and to which the 

consumer may reply without obtaining any 

additional information); N.J. Stat. Ann. § 56:8–42.1 

(a termination email formatted and provided by the 

subscription service provider that a consumer can 

email to the subscription service provider without 

being required to provide any additional 

information). 

436See nn.362–369; see also vlogbrothers, Why 

isn’t this Illegal?, https://www.youtube.com/ 

watch?v=FjAw1LMShIA&

pp=ygUMdmxvZ2Jyb3RoZXJz (last visited Aug. 25, 

2024). 437See, e.g., Anonymous commenter, FTC–2023– 

0033–0024 (could not cancel online even though 

consumer could upgrade online and via TV); 

Individual commenter, FTC–2023–0033–0137 (‘‘3 

months to cancel, 3 minutes to sign-up. 

Seriously?’’); Individual commenter, FTC–2023– 

0033–0252 (detailing three instances where 

consumer signed up online with a few clicks but 

was required to call to cancel, concluding ‘‘the 

method provided for signing up for a service must 

also be provided for cancelling the same service, be 

just as easy to find, and require no more steps than 

it took to sign up.’’); Individual commenter, FTC– 

2023–0033–0457 (‘‘If I enrolled in a subscription 

online, there are no good reasons why I can’t 

disenroll that way as well. Forcing me to call a 

number to unsubscribe, which is only staffed 

during ‘normal business hours,’ unnecessarily 

complicates the process’’); Anonymous commenter, 

FTC–2023–0033–0802 (this practice of making 

someone call or chat to someone to cancel a 

membership is predatory). 

438The Chamber asked the Commission to ‘‘make 

clear that a web-based chat qualifies as an 

appropriate cancellation mechanism where a 

customer signed up for a service online.’’ FTC– 

2023–0033–0885. The Commission reiterates that a 

web-based chat cancellation mechanism may be 

appropriate, but only if the consumer enrolled 

through a virtual or live agent. 

439NCTA, FTC–2023–0033–0858; CTIA, FTC– 

2023–0033–0866. 

440 Id. 

441 Id. 

442NCTA, FTC–2023–0073–0008. 

Specifically, the phrase ‘‘interactive 

electronic medium’’ used in the ‘‘clear 

and conspicuous’’ definition includes 

all media that involve electronic 

communications (except telephone 

calls), whether or not they strictly use 

the internet (and thus would otherwise 

be ‘‘online’’). Consumers may not know 

whether a text or chat is MMS (online) 

or SMS (offline), for example. This 

broader definition should provide 

flexibility to sellers while continuing to 

require parallel cancellation and sign-up 

procedures to meet consumers 

expectations. 

Although the State AGs suggested 

prohibiting the use of email as a 

cancellation mechanism, the record 

provides no basis for doing so. Further, 

consistent with the Commission’s 

definition of interactive electronic 

medium, several States specifically 

allow sellers to use email as an online 

cancellation method.435 Thus, the final 

Rule does not bar the use of email to 

effectuate online cancellation. 

(iii) No interaction with 

representatives for online cancellation. 

The State AGs noted, and consumer 

comments further support, the fact that 

sellers have often used chat, text, and 

messaging to perpetrate the same abuses 

documented for telephone cancellation. 

The Commission, therefore, reiterates all 

cancellation mechanisms, including 

chat, text, messaging, and email, are 

subject to the same ‘‘simple’’ 

requirements, i.e., sellers may not erect 

unreasonable barriers or prevent 

consumers from immediately halting 

charges. Cancellation mechanisms must 

be as easy to use as the mechanism the 

consumer used to sign up, in terms of 

time, expense, burden, and ease of use; 

and the mechanism must be as readily 

accessible as the means the consumer 

used to consent in the first place. 

Consumer comments, as well as the 

Commission’s and State AGs’ 

enforcement experience demonstrate 

asymmetrical enrollment and 

cancellation experiences, such as 

requiring telephone cancellation when 

consumers can easily sign up online 

without speaking with an agent, are 

unfair. Specifically, this asymmetry 

creates unreasonable barriers to 

cancellation, such as unreasonable hold 

times, unreasonable verification 

requirements, and aggressive save 

tactics. Moreover, comments and the 

Commission’s enforcement experience 

indicate consumers likely understand a 

simple online enrollment experience as 

an implied claim that the cancellation 

experience also will be simple.436 As 

consumers themselves explain, they do 

not anticipate engaging with a customer 

service representative (whether by 

phone, or through a web-based chat or 

messaging) if they did not do so to sign 

up for the negative option feature.437

Thus, the Commission further clarifies, 

for online consent, the seller cannot 

require the consumer to engage with an 

agent or customer service representative 

to cancel unless the consumer did so at 

enrollment.438

Finally, the Commission declines to 

exclude industries providing bundled 

services from the same medium 

requirement. NCTA and other industries 

with such services insisted their 

customers are better served by speaking 

with a live representative, even when 

they enroll online.439 They expressed 

concern these sellers cannot confirm a 

consumer’s cancellation intent 

(consumers may want to modify or 

renegotiate services) or apprise 

consumers of any negative 

consequences of cancellation (loss of 

access to emergency services, for 

example) without a live discussion.440

They further assert providing this 

information online could be 

complicated and expensive for the seller 

and not what the consumer would 

prefer.441 NCTA noted only 30% of its 

members’ customers sign up online, 

with the remaining 70% enrolling in 

person or over the phone.442

NCTA’s comment seems to suggest 

the simple cancellation mechanism 

requirement demands a certain 

asymmetry—specifically, no matter how 

complex online enrollment is, the 

proposed Rule would require a simple 

‘‘one click’’ cancellation mechanism, 

which could preclude the seller from 

confirming cancellation intent or 

apprising consumers of negative 

consequences of cancellation. The 

Commission reiterates the simple 

cancellation requirement requires 

symmetry in terms of, inter alia, time, 

burden, expense, and ease of use. It does 

not require use of the exact same 

mechanism. 

Further, existing verification 

procedures, such as two-factor 

authentication, are routinely used to 

ensure a consumer’s identity in highly 

sensitive situations. Thus, they are more 

than sufficient to ensure the correct 

person is cancelling and do not require 

the use of a cancellation mechanism 

different than enrollment. Moreover, at 

this juncture, the Commission has 

removed the proposed ‘‘saves’’ 

provision from the final Rule, making 

communication regarding material 

consequences of cancelling easier to 

convey (so long as communicating 

through the same medium). 

(c) The Commission adopts 

§ 425.6(c)(2): Telephone Cancellation as 

proposed, with one exception. 

The Commission adopts the telephone 

cancellation provision as proposed, 

except the final Rule removes the 

requirement sellers must assure all calls 

are answered during normal business 

hours. Instead, the final Rule requires 

sellers to promptly effectuate 

cancellation requests by consumers via 

a telephone number that is answered or 

records messages during normal 

business hours. 

Several commenters suggested 

specific changes were necessary to 

enhance the proposed telephone 

medium requirements. For instance, the 

State AGs asked the Commission to 

include the various requirements 

detailed in the 2021 Enforcement Policy 

Statement, e.g., require negative option 


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443E.g., the requirements that all cancellation 

mechanisms be simple and easy to use (§ 425.6), 

and the seller disclose where to find the 

cancellation mechanism prior to the sale (§ 425.4). 

444Cf. United States v. Adobe, Inc., No. 5:24–cv– 

03630 (N.D. Cal. 2024) (cancellation fees plead as 

a failure to disclose and failure to obtain consent 

to charge in violation of ROSCA); FTC v. FloatMe 

Corp., No. 5:24–cv–00001 (W.D. Tex. 2024) (extra 

cost in relation to timing of receipt of product 

deceptive in violation of section 5); United States 

v. Cerebral, Inc., No. 1:24–cv–21376 (S.D. Fla. 2024) 

(delays in cancellation deceptive and injured 

consumers in violation of section 5); FTC v. Bridge 

It, Inc., No. 1:23–cv–09651 (S.D.N.Y. 2023) (claims 

to cancel at any time without paying any fees, 

interest, or other charges deceptive); FTC v. Vonage 

Holdings Corp., No. 3:22–cv–06435 (D.N.J. 2022) 

(requiring phone cancellation with roadblocks 

including long hold times, frequent disconnects, 

endless loops, and early termination fee unfair 

under section 5); FTC v. Benefytt Techs., Inc., No. 

8:22–cv–01794 (M.D. Fla. 2022) (unexpected cost 

for additional product is deceptive and unfair); In 

re Dun & Bradstreet, Inc., FTC Docket No. C–4761 

(2022) (renewal practices, including at end of 

designated time periods, deceptive); FTC v. First 

Am. Payment Sys., No. 4:22–cv–00654 (E.D. Tex. 

2022) (misrepresentations in cancellation and 

unfair debiting); United States v. MyLife.com, Inc., 

No. 2:20–cv–6692 (C.D. Cal. 2020) (cancellation by 

phone discouraged or prevented by unavailable or 

uncooperative agents specified as a violation of 

ROSCA); FTC v. Match Grp., Inc., No. 3:19–cv– 

02281 (N.D. Tex. 2019) (pleading cancellation 

difficulties in violation of ROSCA); In re Urthbox, 

Inc., FTC Docket No. C–4676 (2019) (unexpected 

charges, including for a full 6 months following the 

first month of free trial, are a failures to disclose in 

violation of section 5); FTC v. Cardiff, No. 5:18–cv– 

02104 (C.D. Cal. 2018) (unexpected charges a 

section 5 misrepresentation and unfair charging); 

FTC v. BunZai Media Grp., Inc., No. 2:15–cv–04527 

(C.D. Cal. 2015) (failure to disclose charge as 

deceptive and unfair); FTC v. Tarr, No. 3:17–cv– 

02024 (S.D. Cal. 2017) (failure to disclose material 

terms deceptive and unfair); FTC v. AdoreMe, Inc., 

No. 1:17–cv–09083 (S.D.N.Y. 2017) (cancelling 

made difficult by phone, contributing to 

misrepresentations regarding store credit); FTC v. 

RevMountain, LLC, No. 2:17–cv–02000 (D. Nev. 

2017) (unexpected product deceptive); FTC v. 

AAFE Prods. Corp., No. 3:17–cv–00575 (S.D. Cal. 

2017); FTC v. Health Formulas, LLC, No. 2:14–cv– 

01649 (D. Nev. 2014) (deceptive costs). 

445N/MA suggested there may be instances where 

the original method of consent is no longer 

available. FTC–2023–0033–0873. For example, if 

the person signed up a trade show in person, 

returning to the in-person venue may be impossible. 

The Commission notes the in-person method only 

must be made available, ‘‘where practical.’’ 

446NPRM, 88 FR 24729. 

447See, e.g., Individual commenter, FTC–2023– 

0033–0006 (‘‘Last year I had the pleasure of trying 

to cancel a radio subscription which took 2 

attempts and far too much time to accomplish. 

Unable to cancel online, I was forced to call and 

speak with several agents trying to convince me to 

keep their service. After nearly a half hour of 

insisting I wanted to cancel, they simply hung up 

on me which forced me to start the cancellation 

process all over again from the beginning.’’); 

Anonymous commenter, FTC–2023–0033–0024 

(able to cancel only after listening to a ‘‘long sale 

pitch about why he shouldn’t’’); Anonymous 

commenter, FTC–2023–0033–0066 (when you 

request a cancellation, will pass your call on to a 

more ‘‘experienced representative’’ in an attempt to 

convince you to keep your service. They do not 

listen to your concerns, instead make you jump 

through hoops for a cancellation which makes me 

not want to be one of their customers even more); 

Individual commenter, FTC–2023–0033–0071 (call 

to cancel and they repeatedly said ‘‘well let’s just 

see how we can save you money’’ instead of 

canceling); Individual commenter, FTC–2023– 

0033–0082 (‘‘You have to call them and endure a 

high pressure pitch to renew . . . . It wastes time 

and minutes on your phone bill’’); Anonymous 

commenter, FTC–2023–0033–0097 (the only way to 

cancel a service is to call them on the phone, 

intended to allow for sales reps to make a pitch); 

Individual commenter, FTC–2023–0033–0120 

(‘‘However, when you attempt to cancel a 

continuous subscription you are told you cannot do 

that and you must call the provided phone number. 

You are connected to a sales person who then will 

negotiate with you to continue at a lower rate.’’); 

Individual commenter, FTC–2023–0033–0125 

(‘‘The only way for me to cancel this service was 

to CALL THEM DIRECTLY, whereupon they spent 

nearly half an hour trying to upsell me into a two 

year subscription.’’); Individual commenter, FTC– 

2023–0033–0130 (‘‘It should not be required to call 

(and sit on hold forever), only to have to sit through 

a diatribe of hard-sell techniques to try to convince 

Continued 

sellers ‘‘not [to] erect unreasonable 

barriers to cancellation or impede the 

effective operation of promised 

cancellation procedures, and . . . honor 

cancellation requests that comply with 

such procedures.’’ However, the 

proposed provisions already include 

these requirements.443

Nonetheless, several commenters 

correctly pointed out requiring sellers to 

answer cancellation calls during normal 

business hours could create 

considerable costs for small businesses 

while not directly addressing the core 

problem identified by the 

Commission—the unreasonable delay of 

cancellation requests. To address these 

concerns, the Commission first clarifies 

normal business hours are those hours 

in which the business would normally 

engage with its customers. A seller, 

however, cannot make telephone 

cancellation available only at times that 

are so inconvenient they erect a barrier 

to cancellation. For instance, it would 

be improper to limit cancellation calls 

to only between midnight and 3 a.m., 

regardless of whether these are the 

seller’s normal business hours. 

Importantly, however, the final Rule 

does not require a seller to physically 

answer the telephone call (a task that 

could be difficult for, e.g., a sole 

proprietorship). An answering machine 

that clearly provides for cancellation 

(e.g., a message stating: if you want to 

cancel your subscription please identify 

that subscription, and leave identifying 

information) would comply with this 

provision of the Rule. To effectuate the 

provision’s intent, the final Rule states 

sellers, whether answering the 

cancellation call in person or not, must 

effectuate that cancellation promptly. 

Thus, a seller could not, for example, 

have an answering machine it does not 

regularly monitor or for which it does 

not promptly effectuate cancellation 

requests. 

Notably, the final Rule retains the 

requirement that, for the mechanism to 

be at least as simple as the one used to 

initiate the recurring charge, any 

cancellation call cannot be more 

expensive than the call used to enroll 

(e.g., if the sign-up call is toll free, the 

cancellation call must also be toll free). 

Consumers would not expect such fees, 

rendering them unfair or deceptive.444

(d) The Commission adopts 

§ 425.6(c)(3): In-Person Cancellation as 

proposed. 

Based on the Commission’s 

experience and that of other States, as 

well as many comments in the record, 

requiring in-person cancellation 

presents significant opportunities for 

unfair and deceptive practices. To 

prevent such practices, the final Rule 

adopts provision 425.6(c)(3) essentially 

as proposed. Thus, the provision 

continues to require in-person sellers to 

provide alternatives to in-person 

cancellation, either online or by phone, 

at the seller’s choice. The Commission, 

however, corrects the requirement that 

if the alternative is a telephone call, the 

call cannot be more costly than the inperson consent. That proposal 

connected two unrelated costs and thus 

did not make logical sense. To effectuate 

the purpose of this provision, however, 

the Commission adds language stating 

the call cannot impose any cost that 

creates an unreasonable barrier to 

cancellation, including by making the 

call unreasonably expensive.445

To address ICA’s concerns, the 

Commission clarifies the Rule does not 

require sellers who sell in-person to 

maintain an alternative online presence 

to process cancellations. Sellers who 

have no such presence can allow 

cancellations by phone if they comply 

with the simple telephone cancellation 

requirements detailed above. 

(c) § 425.6(d) Saves 

(1) Summary of Comments 

Proposed § 425.6(d) would have 

required sellers to immediately 

effectuate cancellation unless they 

obtained the consumer’s unambiguously 

affirmative consent to receive a save 

prior to cancellation. The Commission 

explained the record shows many 

businesses have created unnecessary 

and burdensome obstacles to 

cancellation, including forcing 

uninterested consumers to sit through 

multiple upsells before allowing them to 

cancel.446 Individual consumer 

commenters corroborated the pervasive 

use of such unfair tactics to thwart 

cancellation.447


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one not to cancel.’’); Individual commenter, FTC– 

2023–0033–0233 (‘‘I had to wait on hold and then 

get sales pitch after sales pitch after sales pitch to 

cancel a digital-only [newspaper] subscription that 

I signed up for online.’’); Individual commenter, 

FTC–2023–0033–0228 (had difficulty canceling a 

newspaper subscription of all things as it required 

consumer to call an 800 number during the day and 

then had to listen to multiple sales pitches and 

saying ‘‘No! What part of ‘no’ don’t you 

understand’’ to cancel); Individual commenter, 

FTC–2023–0033–0312 (‘‘I and members of my 

family have had to use valuable time to call 

corporations to cancel subscriptions, each time 

getting a long pitch to keep the subscription. If I 

wanted to keep it, I would not be calling to cancel 

it.’’); Individual commenter, FTC–2023–0033–0356 

(‘‘If it took one click to join, it should take one click 

to cancel. I am tired of calling some call center, 

waiting on hold, and then having someone go 

through a long script about why I should not 

cancel.’’); Individual commenter, FTC–2023–0033– 

0457 (Forcing me to call a number to unsubscribe, 

which is only staffed during ‘‘normal business 

hours,’’ unnecessarily complicates the process for 

the provider’s benefit: I don’t need to give 

opportunity to upsell or persuade me to continue 

at a reduced price.); Individual commenter, FTC– 

2023–0033–0491 (‘‘Some have even required me to 

make a phone call and listen to a hard sell before 

they will cancel the service.’’); Individual 

commenter, FTC–2023–0033–0597 (have to sit and 

turn down multiple offers to cancel); FTC–2023– 

0033–0677 (sit and ‘‘suffer through a long sales 

pitch’’ to cancel); Individual commenter, FTC– 

2023–0033–0784 (‘‘I suggest limiting the seller’s 

efforts to pitch additional offers & modifications 

when trying to cancel . . . . no one wants to wade 

through too many of screens until the cancel 

‘finally’ appears.’’); Anonymous commenter, FTC– 

2023–0033–0785 (person being ‘‘penalized by 

losing time waiting to speak to a customer service 

rep, having to decline further sales, or being stuck 

with recurring charges they don’t want’’); 

Individual commenter, FTC–2023–0033–0798 

(difficult to cancel subscriptions, including by 

repeatedly forcing the customer to turn down 

‘‘special offers’’ to entice the customer not to 

cancel); Individual commenter, FTC–2023–0033– 

0815 (No reason to have to call customer service 

reps who will keep trying to prevent me from 

canceling); Individual commenter, FTC–2023– 

0033–0835; Individual commenter, FTC–2023– 

0033–0850 (Have to make a long awkward phone 

call and wait on hold or long repetitive live chat); 

Individual commenter, FTC–2023–0033–0913 (‘‘I’ve 

experienced having to call to cancel a subscription 

only to be forced to listen to a sales spiel in order 

to do so.’’); Individual commenter, FTC–2023– 

0033–0967 (‘‘Some have even required me to make 

a phone call and listen to a hard sell before they 

will cancel the service.’’); Individual commenter, 

FTC–2023–0033–0999 (Consumers should have an 

on-line option to cancel. A national media company 

ONLY provides a cancel option with a call to 

customer service. When doing so, you are met with 

a CS rep that will not accept your request to cancel, 

talks over you, continued harassment, making offer 

after offer. We must stop this deceptive practice.); 

Individual commenter, FTC–2023–0033–1063 

(‘‘Now I’m about to cancel my [company name] 

account. If it’s anything like the last time when I 

moved, I expect to spend several hours dealing with 

multiple levels of salespeople, trying to convince 

me to stay.’’); Individual commenter, FTC–2023– 

0033–1099 (Once customer service is contacted, it 

should not take more than about 90 seconds to 

cancel a subscription instead of the endless 

questions of why you want to cancel. Then try to 

keep you by offering a discounted rate on yet 

another year of useless service. Please make this 

end.); Individual commenter, FTC–2023–0033–1138 

(The agent, made multiple attempts to sell me the 

service, disregarding my many direct statements 

that I just wanted to cancel.); Individual 

commenter, FTC–2023–0033–1150 (They make you 

call their company so that sales retention can try 

to talk you into staying with freebies etc.); 

Individual commenter, FTC–2023–0033–1153 

(There is no reason a person should be subjected 

to 20 minutes or repeated drilling if they say 

upfront that they want to cancel service.). 

448NCTA, FTC–2023–0033–0858; PDMI, FTC– 

2023–0033–0864; Chamber, FTC–2023–0033–0885. 

449 Id. 

450See, e.g., PDMI, FTC–2023–0033–0864; ANA, 

FTC–2023–0033–1001; CTIA, FTC–2023–0033– 

0866. 

451See, e.g., CCIA, FTC–2023–0033–0984. Some 

commenters also argued the saves provision 

violates the First Amendment. E.g., PDMI, FTC– 

2023–0033–0864; Chamber, FTC–2023–0033–0885; 

ACT App Association, FTC–2023–0033–0874. The 

Commission rejects this proposition. See 

Mainstream Mktg. Servs., Inc. v. FTC, 358 F.3d 1228 

(10th Cir. 2004). 

452See nn.447–448. 

453See nn.449–452. 

454See, e.g., United States v. Adobe, Inc., No. 

5:24–cv–03630 (N.D. Cal. 2024); FTC v. 

Amazon.com, Inc., No. 2:23–cv–0932 (W.D. Wash. 

2023). 

455NPRM, 88 FR 24729, citing FTC Policy 

Statement on Unfairness, appended to In re 

International Harvester Co., 104 F.T.C. 949 (1984). 

‘‘To justify a finding of unfairness the injury must 

satisfy three tests. It must be substantial; it must not 

be outweighed by any countervailing benefits to 

consumers or competition that the practice 

produces; and it must be an injury that consumers 

themselves could not reasonably have avoided.’’ Id.; 

see also 15 U.S.C. 45(n) (Commission has no 

authority to declare a practice unfair ‘‘unless the act 

or practice causes or is likely to cause substantial 

injury to consumers which is not reasonably 

avoidable by consumers themselves and not 

However, other commenters 

explained some of the ‘‘barriers’’ 

consumers complained about are 

necessary to prevent harm, at least in 

certain situations. Specifically, 

commenters noted consumers might not 

understand the negative consequences 

of cancellation,448 and the provision 

might prevent consumers from taking 

advantage of money-saving offers prior 

to cancellation.449 Some commenters 

also expressed confusion regarding 

whether verification or authentication 

procedures, or discussion of consumers’ 

attempts to pause or modify their 

existing offers, would violate the 

Rule.450 Finally, commenters noted the 

proposed provision requiring consumers 

to opt-in to saves could interfere with 

the simplicity of a cancellation 

mechanism.451

(2) Analysis 

Based on the record, the Commission 

determines revisions to this proposed 

provision are necessary, for which the 

Commission would need to seek 

additional comment. Therefore, the 

Commission does not adopt this 

provision in the final Rule at this time. 

On one hand, the record demonstrates 

saves are often used simply as a barrier 

to prevent cancellations.452 On the 

other, the proposed opt-in save 

provision could have unintended 

consequences.453 Specifically, the 

provision may thwart attempts to 

confirm consumers’ intent or apprise 

consumers of any negative 

consequences of cancellation (e.g., 

losing data). Moreover, the opt-in save 

provision may prevent consumers from 

obtaining valuable concessions (e.g., 

lower prices), which they would 

otherwise want. 

Consequently, the proposed saves 

provision did not achieve the right 

balance between protecting consumers 

from unfair tactics and allowing sellers 

to provide necessary and valuable 

information about cancellation. 

Therefore, the Commission will 

consider issuing an SNPRM in the 

future seeking a better solution to this 

difficult problem. 

However, the Commission notes the 

removal of the saves proposal is not a 

license to erect unreasonable and 

unnecessary barriers to cancellation. 

The final Rule requires sellers to 

provide a simple, easy to use 

cancellation mechanism. Save attempts 

that interfere with this mandate by 

requiring consumers to navigate through 

upsells, jump through unreasonable 

hoops, or wait unreasonable amounts of 

time to cancel are neither simple nor 

easy.454

7. Proposed § 425.7 Annual Reminders 

In the NPRM, the Commission 

proposed requiring sellers to provide an 

annual reminder to consumers for nonphysical goods sold with a negative 

option feature. Under this proposal, 

reminders would have needed to 

identify the product or service, the 

frequency and amount of charges, and 

the means to cancel. Additionally, the 

proposal required Negative Option 

Sellers to provide the reminders through 

the same medium the consumer used to 

consent to the negative option feature. 

The Commission opined the delivery of 

physical goods may remind consumers 

they enrolled in a negative option 

feature. Therefore, these consumers 

effectively already receive reminders 

and can reasonably avoid further 

payments by canceling their 

subscription. For services lacking a 

regular, tangible presence (e.g., data 

security monitoring or subscriptions for 

online services), however, many 

consumers may reasonably forget they 

enrolled and, consequently, incur 

charges for services they do not want or 

use. Thus, the Commission concluded, 

the failure to provide reminders for such 

contracts would meet all elements of 

unfairness.455 The Commission sought 


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outweighed by countervailing benefits to consumers 

or to competition’’). 

456NPRM, 88 FR 24729; see also id. at section 

XIII, Request for Comments (‘‘The Commission 

seeks any suggestions or alternative methods for 

improving current requirements.’’). 

457The Commission received comments from, 

inter alia, individual consumers; cable/broadband/ 

communications industry groups; public interest 

and consumer advocacy groups; various trade 

associations representing traditional and digital 

marketing, technology, news and magazine media, 

gaming and entertainment, and retail industries; 

academic and public policy groups; and service 

contract and alarm company industries. 

458State AGs, FTC–2023–00330–0886. 

459Public Interest Groups, FTC–2023–0033–0880. 

460NCTA, FTC–2023–0033–0858. 

461 IAB, FTC–2023–0033–1000. 

462ESA, FTC–2023–0033–0867; NCTA, FTC– 

2023–0033–0858. 

463See, e.g., Sirius XM, FTC–2023–0033–0857 

(asking Commission not to mandate exactly how 

renewal notices must be sent); N/MA, FTC–2023– 

0033–0873 (allow sellers to obtain consent to 

provide notice through alternate means); Chamber, 

FTC–2023–0033–0885 (proposed revisions); DCN, 

FTC–2023–0033–0983 (make annual notice an 

option company could comply with to provide 

adequate notice of obligations); ACT App 

Association, FTC–2023–0033–0874 (adopt a less 

prescriptive approach so same medium can be used 

to comply with State and Federal requirements). 

464CTA, FTC–2023–0033–0997 (no basis to 

conclude different medium is unfair, or that lack of 

reminders is unfair). 

465NCTA, FTC–2023–0033–0858 (lack of notice 

for ‘‘always on’’ services not unfair, injury 

reasonably avoidable); USTelecom, FTC–2023– 

0033–0876 (same). 

466See, e.g., CTIA, FTC–2023–0033–0866 

(exempt mobile services offered on a month-tomonth basis); USTelecom, FTC–2023–0033–0876 

(exempt broadband and communication services). 

The Commission addresses exemptions elsewhere 

in the SBP at sections VII.B.1 and VIII. 

467See, e.g., Chamber, FTC–2023–0033–0885. 

468Sirius XM, FTC–2023–0033–0857; Kuehn, 

FTC–2023–0033–0871; N/MA, FTC–2023–0033– 

0873; Act App Association, FTC–2023–0033–0874; 

CTA, FTC–2023–0033–0997; Chamber, FTC–2023– 

0033–0885; ANA, FTC–2023–0033–1001. 

469Sirius XM, FTC–2023–0033–0857; Kuehn, 

FTC–2023–0033–0871; N/MA, FTC–2023–0033– 

0873; Chamber, FTC–2023–0033–0885; SCIC, FTC– 

2023–0033–0879. 

470Sirius XM, FTC–2023–0033–0857; Kuehn, 

FTC–2023–0033–0871; Chamber, FTC–2023–0033– 

0885; Public Interest Groups, FTC–2023–0033– 

0880. 

471State AGs, FTC–2023–0033–0886. 

472 Individual commenter, FTC–2023–0033–0026; 

TINA, FTC–2023–0033–1139. 

473NCTA, FTC–2023–0033–0858; ESA, FTC– 

2023–0033–0867; IAB, FTC–2023–0033–1000; ACT 

App Association, FTC–2023–0033–0874. 

474Hoofnagle, FTC–2023–0033–1137. 

475 Individual commenter, FTC–2023–0033–0039 

(not reminded ‘‘that the free trial was up’’); 

Individual commenter, FTC–2023–0033–0045 

(‘‘consumer should get an email reminder their free 

period is about to end’’); Individual commenter, 

FTC–2023–0033–0050 (businesses should ‘‘be 

required to provide advance notice that the free trial 

is about to expire.’’); TINA, FTC–2023–0033–1139; 

ACT App Association, FTC–2023–0033–0874 

(provide less prescriptive process). 

comment on this proposal, including 

whether it should narrow the coverage 

of the proposed language, for example, 

by types of covered services or the 

duration between reminders.456

(a) Summary of Comments 

The Commission received 32 

comments in response.457 Consumers, 

public interest and consumer advocacy 

groups, and academics, among others, 

generally supported the reminder 

requirement, observing, for example, 

that ‘‘subscription-based products and 

services have become so widespread 

that consumers are having difficulty 

keeping track of them all.’’ 458 The 

commenters asserted the proposed 

‘‘annual notice will clearly inform 

consumers of the terms of the contract 

and how they may terminate the 

agreement.’’ 459 Despite this support, 

virtually every group of commenters— 

individuals, consumer advocates, trade 

organizations, and industry groups— 

suggested the Commission modify or 

clarify its proposal. 

Only three commenters specifically 

requested the Commission jettison a 

reminder provision altogether. 

Specifically, ESA argued the 

requirement (1) would impose a 

significant burden on businesses 

because several State laws already 

require reminders or notices; (2) would 

be improper because the Commission 

did not raise reminders in the ANPR; 

and (3) would increase the overall 

number of notices consumers receive, 

which could result in consumers 

ignoring reminders, thus benefiting bad 

actors. NCTA suggested the Commission 

should instead ‘‘allow businesses 

flexibility to determine whether to 

provide reminders.’’ 460 IAB also 

‘‘recommend[ed] that the Commission 

remove this requirement for several 

reasons.’’ 461 Both ESA and NCTA 

conceded, however, the Commission 

could adopt the provision with 

additional modifications, such as 

making the reminders optional (NCTA) 

or offering consumers the ability to optout of subscription reminders (ESA).462

Other commenters agreed, asking for 

‘‘less prescriptive’’ requirements that 

would allow businesses more 

flexibility.463

Several commenters, while not urging 

the Commission to reject the reminder 

requirement, suggested the NPRM 

proposal did not satisfy the unfairness 

test. For instance, CTA, a technology 

trade association, questioned whether 

there was sufficient basis to find a lack 

of annual reminder is an unfair practice 

or causes consumer harm.464 Similarly, 

two other commenters from the 

communications industry questioned 

whether a lack of annual reminder 

would be unfair in the specific context 

of services that are ‘‘always on,’’ such as 

cable or wireless services.465

A few commenters asked to be 

exempted from the reminder 

requirement based on the nature of their 

industries or the frequency of existing 

notices.466 For instance, cable/ 

broadband/wireless/streaming industry 

groups suggested they should be exempt 

for the same reasons they argued the 

unfairness test did not render the lack 

of reminders illegal in their industries. 

Similarly, these and other sellers, such 

as service contract providers, suggested 

consumers who receive monthly bills 

are already effectively receiving 

reminders, and therefore, these 

transactions should be exempt.467

Several commenters questioned the 

proposed requirement that sellers 

provide the annual reminder through 

the same medium the consumer used to 

consent to the negative option 

feature.468 For example, several 

commenters observed that requiring 

reminders through a telephone call 

could violate the TCPA, the TSR, or at 

minimum, be a nuisance, and thus 

ignored by consumers.469 Many of these 

commenters advocated for letting 

consumers choose how they want to 

receive annual reminders,470 or 

allowing sellers to provide reminders 

through any medium they typically use 

to communicate with consumers.471

Additionally, several commenters 

disagreed with the Commission’s 

observation that agreements involving 

delivery of physical goods inherently 

create a ‘‘regular, tangible presence’’ 

that serves as a reminder of the 

contract.472 For example, they noted 

some companies charge a monthly fee, 

but only deliver physical goods at the 

consumer’s request. 

Some commenters stated that, without 

Federal preemption, the annual 

reminder requirement would create 

another layer of regulatory complexity 

because several State laws already 

require reminders or notices.473 In 

contrast, Professor Hoofnagle stated 

many ‘‘credit card processing service’’ 

providers likely afford a simple and 

inexpensive means for sellers to comply 

with State and Federal mandates 

‘‘because policy changes can be made 

programmatically in dashboards.’’ 474

Several commenters suggested the 

Commission amend the proposal. For 

instance, TINA and several individual 

consumers recommended the 

Commission require reminders at the 

end of a free trial period.475 Others 

suggested the Commission require more 

frequent reminders, such as every six 


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476Public Interest Groups, FTC–2023–0033–0880 

(‘‘consumers deserve to know when they are about 

to be charged automatically, with a chance to opt 

out’’); State AGs, FTC–2023–0033–0886; MIA, FTC– 

2023–0033–1008; Individual commenter, FTC– 

2023–0033–0026 (notification within one month of 

renewal, stating specific renewal date); Individual 

commenter, FTC–2023–0033–0708 (commenting 

that companies do not provide reminders before 

being charged, possibly overdrawing an account). 

477See, e.g., Public Interest Groups, FTC–2023– 

0033–0880. 

478Law Professors, FTC–2023–0033–0861. 

479NCTA, FTC–2023–0033–0858; USTelecom, 

FTC–2023–0033–0876; CCIA, FTC–2023–0033– 

0985 (recommending a biannual reminder for 

longer subscriptions); and Coalition, FTC–2023– 

0033–0884; see also DCN, FTC–2023–0033–0983 

(incorrectly states the current proposed rule would 

require monthly notice for month-to-month 

renewals). 

480NCTA, FTC–2023–0033–0858 (opt in); ESA, 

FTC–2023–0033–0867 (opt out); Chamber, FTC– 

2023–0033–0885 (opt in); DCN, FTC–2023–0033– 

0983 (opt out); Public Interest Groups, FTC–2023– 

0033–0880 (opt out). 

481NCTA, FTC–2023–0033–0858; ESA, FTC– 

2023–0033–0867; DCN, FTC–2023–0033–0983. 

482ANA, FTC–2023–0033–1001 (same medium); 

Law Professors, FTC–2023–0033–0861 (adequate 

phone reminder). 

483Sirius XM, FTC–2023–0033–0857; NFIB, FTC– 

2023–0033–0789. 

484ACT App Association, FTC–2023–0033–0874. 

485State AGs, FTC–2023–0033–0886 

(‘‘Subscription management has become an entire 

industry; consumers can choose from a variety of 

companies that offer to monitor their recurring 

subscriptions. We believe that consumers should 

not have to sign up for yet another service—one that 

comes with privacy and security risks, as 

subscription monitoring services require sharing 

financial account and other sensitive information— 

in order to effectively manage their subscriptions.’’). 

486See proposed § 425.8. 

487ANA, FTC–2023–0033–1001. 

488NCTA, FTC–2023–0033–0858; PDMI, FTC– 

2023–0033–0864; CCIA, FTC–2023–0033–0984; 

ESA, FTC–2023–0033–0867; IAB, FTC–2023–0033– 

1000. 

489NCTA, FTC–2023–0033–0858; see also 

Chamber, FTC–2023–0033–0885 (‘‘A floor just 

creates an increased [F]ederal burden without 

actually ensuring consistency of overall regulation 

on entities in the different [S]tates.’’). 

490 IHRSA, FTC–2023–0033–0863 (national 

standard). 

491CTA, FTC–2023–0033–0997; see also Sirius 

XM, FTC–2023–0033–0857; DCN, FTC–2023–0033– 

0983. 

492Coalition, FTC–2023–0033–0884; CCIA, FTC– 

2023–0033–0984. 

493NRF, FTC–2023–0033–1005. 

494 Id. 

months, or before each charge.476 They 

noted that under an annual notice 

requirement, a consumer could be 

charged up to 12 times before 

discovering a negative option feature.477

One commenter asked the Commission 

to require a reminder for so-called 

‘‘zombie’’ agreements, ones that have 

long periods, e.g., 24 months, of 

inactivity.478

In contrast, other commenters noted 

consumers may suffer from ‘‘notice 

fatigue’’ given the increasing popularity 

of subscription services.479 Some argued 

there is no evidence of tangible 

consumer benefit from additional 

notices, and consumers should be given 

a choice whether to opt-in to receive 

annual reminders (or more frequent 

reminders), or to opt-out.480 Three 

commenters suggested sending annual 

reminder notices could increase 

opportunities for phishing and other 

deceptive practices.481

Finally, several commenters asked the 

Commission to clarify certain aspects of 

the reminder requirement. For instance, 

ANA asked the Commission to explain 

what constitutes the ‘‘same medium,’’ 

and a group of law professors asked for 

more detail about what constitutes an 

adequate telephone reminder.482

Additionally, some commenters asked 

the Commission to clarify that sellers 

can rely on contact information 

provided by the consumer at the time of 

consent,483 or to provide that abiding by 

State reminder requirements satisfies a 

seller’s obligations under this 

provision.484

(b) Analysis 

After reviewing these comments, the 

Commission determines it needs 

additional information on the scope and 

particularities of the proposed annual 

reminder requirement. The record 

suggests, given the proliferation of 

subscription and auto-renewal services, 

consumers have difficulty tracking all 

the negative option services and 

products in which they may be 

enrolled—so much so that there are now 

companies claiming to help consumers 

keep track of these services for a fee. As 

one commenter noted, consumers 

should not have to sign up for yet 

another service to manage all their 

subscriptions.485 Thus, limiting the 

reminder provision to just non-physical 

goods, and only annually, may not 

adequately mitigate the harm caused by 

negative option practices in the 

marketplace. 

Additionally, the Commission shares 

some commenters’ concerns that 

consumers may ignore these reminder 

calls. Further, as some commenters 

noted, the proposed provision does not 

specify the timing for these reminders 

(e.g., should sellers issue reminders 

annually from the date of initial 

purchase and a specific number of days 

before the charge?). Accordingly, the 

Commission will consider issuing a 

SNPRM seeking additional comment on 

these issues at a later date. 

8. Proposed § 425.8 Relation to State 

Laws 

In its NPRM, the Commission 

proposed that amendments to the Rule 

would not affect State laws, regulations, 

orders, or interpretations relating to 

negative options, except to the extent 

they are inconsistent with the final 

Rule, and then only to the extent of the 

inconsistency. A State provision would 

not be ‘‘inconsistent’’ with the proposed 

Rule if it affords any consumer greater 

protection than the Rule.486

The Commission received a range of 

comments in response. On one end, a 

commenter opined the ‘‘FTC cannot 

preempt existing [State] laws,’’ so it 

should instead strive for 

‘‘harmonization and consistency with 

existing laws.’’ 487 At the other end, 

multiple industry groups said the 

Commission should completely preempt 

State laws in this area.488 These 

commenters argued having both State 

and Federal standards may confuse 

consumers and create financial and 

operational burdens for sellers, thus 

raising consumer prices. For example, 

NCTA asserted that, without 

preemption, the proposed Rule ‘‘would 

encourage the enactment of new [S]tate 

laws with differing standards.’’ 489

Another industry commenter suggested 

the Commission should work with 

lawmakers on one national standard.490

Other industry groups and individual 

businesses supported preemption in 

various ways. For example, CTA argued 

the Rule should ‘‘preempt [S]tate laws 

with differing requirements.’’ 491 Two 

additional commenters, including a 

mixed group of industry associations, 

asserted the Rule should set the ceiling 

and preempt any State provision that is 

more stringent.492

NRF said the Rule should ‘‘preempt 

any [S]tate law requirements that 

contradict or are inconsistent with the 

Rule . . . to the extent of the 

inconsistency.’’ 493 To effectuate this 

change, NRF suggested the Commission 

adopt language from California’s 

Automatic Renewal Law, which it said 

other States have copied. NRF proposed 

State laws be deemed inconsistent if 

they require disclosures or actions ‘‘that 

contradict . . . the [final rule],’’ and 

requirements be deemed contradictory if 

they use the same terms differently from 

the final rule or require ‘‘using a term 

different from the one required in the 

[final rule] to describe the same 

item.’’ 494

Several industry groups expressed 

concern regarding potential confusion 

about preemption. For example, ACA 

Connects asserted it ‘‘may be unclear 

whether and to what extent [a particular 

State law offers] ‘greater’ or ‘lesser’ 

protection than [the proposed Rule]’’ 

and asked for more guidance generally 

or for a process that lets interested 

parties ask the Commission if a 


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495ACA, FTC–2023–0033–0881 (greater or lesser); 

NRF, FTC–2023–0033–1005 (more guidance); DCN, 

FTC–2023–0033–0983 (more guidance). 

496NRF, FTC–2023–0033–1005. 

497Law Professors, FTC–2023–0033–0861. 

498 Id. 

499See, e.g., Am. Fin. Servs. Ass’n v. FTC, 767 

F.2d 957, 989 (D.C. Cir. 1985). 

500Preemption would occur where there is an 

actual conflict between the two schemes of 

regulation such that both cannot stand in the same 

area. Fla. Lime & Avocado Growers, Inc. v. Paul, 

373 U.S. 132, 141 (1963); see also Am. Fin. Servs. 

Ass’n v. FTC, 767 F.2d 957 (D.C. Cir. 1985) (Credit 

Practices Rule); Harry & Bryant Co. v. FTC, 726 F.2d 

993 (4th Cir. 1984) (Funeral Rule); Am. Optometric 

Ass’n v. FTC, 626 F.2d 896 (D.C. Cir. 1980) 

(Ophthalmic Practices Rule). 

501See, e.g., 16 CFR 437.9(b) (Business 

Opportunity Rule); id. 435.3(b) (Merchandise Rule); 

id. 436.10 (Franchise Rule); id. 429.2 (Cooling-Off 

Rule). 

502See, e.g., NPRM, 88 FR 24730. 

503Categories of products and services for which 

commenters sought exemptions include: alarm 

companies (FTC–2023–0033–0860; FTC–2023– 

0033–1001); wireless carriers (FTC–2023–0033– 

0866); telecommunication providers (FTC–2023– 

0033–0876; FTC–2023–0033–0881); service 

contracts (FTC–2023–0033–0877; FTC–2023–0033– 

0879; FTC–2023–0033–0882; FTC–2023–0033– 

0996; FTC–2023–0033–1136; FTC–2023–0033– 

1143); insurance agreements, service contracts on 

consumer goods, and cancellable month-to-month 

agreements (FTC–2023–0033–0878); and retail 

energy service (FTC–2023–0033–1151). Some of 

these and others sought to exclude B2B agreements. 

See section VII.B.1.c. 

504See 16 CFR 1.25, 1.31; see also 86 FR 59851 

(Oct. 29, 2021) (amending Commission procedures 

and rules on the petition exemption process). 

505NFIB, FTC–2023–0033–0789. 

506This provision is comparable to the 

severability provision in other Commission Rules. 

See 16 CFR 437.10 (Business Opportunity Rule); 16 

CFR 455.7 (Used Motor Vehicle Rule); 16 CFR 

436.11 (Franchising Rule); 16 CFR 453.8 (Funeral 

Industry Rule); 16 CFR 310.9 (TSR). 

507NPRM, 88 FR 24730. 

508NPRM, 88 FR 24724. 

509Those States include Virginia, California, and 

Oregon. NPRM, 88 FR 24724. 

510ESA, FTC–2023–0033–0867; USTelecom, 

FTC–2023–0033–0876; ACA, FTC–2023–0033– 

0881; IAB, FTC–2023–0033–1000; and TINA, FTC– 

2023–0033–1139. 

particular State law is inconsistent.495

NRF noted such a system has worked 

well with gift card laws, explaining the 

CARD Act (Pub. L. 111–24, 124 Stat. 

2385) preempts less restrictive State 

laws.496

Finally, a group of law professors 

supported the Commission’s proposed 

Rule. They noted ‘‘more than half of 

[S]tates . . . regulate some negative 

option marketing practices,’’ and said 

the Commission ‘‘does not occupy the 

field or displace non-conflicting [S]tate 

[laws].’’ 497 The professors added States 

‘‘can often move more nimbly to address 

problematic elements and evolving 

business models’’ and should retain the 

ability to do so.498

Having considered the foregoing 

comments, the Commission will 

streamline the text of the final Rule for 

clarity and efficiency, while 

maintaining the substance of the 

proposed Rule’s proposed preemption 

language (renumbered in the final Rule 

as § 425.7). The FTC Act does not 

expressly preempt State law, and the 

legislative history of the FTC Act 

indicates Congress did not intend the 

FTC to occupy the consumer protection 

regulation field.499 Therefore, any 

preemptive effect of the Rule must be 

limited to instances where it is not 

possible to comply with both State law 

and the Rule, or where application of 

State law would frustrate the purposes 

of the Rule.500 This approach preserves 

States’ ability to continue to act as 

laboratories to handle new and changing 

business models. This approach is 

consistent with other Commission 

Rules.501

Therefore, § 425.7 of the final Rule 

specifies the Rule does not supersede, 

alter, or affect State statutes, regulations, 

orders, or interpretations relating to 

negative option marketing, except to the 

extent a State statute, regulation, order, 

or interpretation is inconsistent with the 

Rule. The final language also continues 

to make clear State requirements are not 

inconsistent with the Rule to the extent 

they afford greater protection to any 

consumer. The manners in which a 

State law may provide greater protection 

are many. For example, a State law that 

requires sellers to remind consumers at 

the end of a free trial that they are about 

to be billed would provide greater 

protection to consumers and not be 

inconsistent with the Rule. 

VIII. Modifications, Alternatives 

Considered 

A. New Provisions in Final Rule for 

Clarification 

1. New § 425.8 Exemptions 

The NPRM sought comment on 

whether the Rule should exempt any 

entities or activities that are otherwise 

subject to the Commission’s authority 

under the FTC Act.502 Several 

commenters requested Rule exemption 

for their business or industry.503 These 

commenters made various arguments 

based on the law and facts in their 

particular circumstances. For example, 

some argued existing State licensing and 

other requirements that already apply to 

their activities adequately address the 

problems identified in the NPRM and 

additional rules would only interfere 

with the existing regulatory structure. 

Because such decisions are highly fact 

dependent, the Commission must 

consider exemptions, even of larger 

groups, on an individualized basis 

pursuant to the FTC’s Rules of 

Practice.504 Pursuant to these rules, 

interested persons may file petitions for 

exemption with relevant evidence and 

data. If the Commission deems the 

petition sufficient to warrant further 

consideration, it will follow the 

procedures outlined in § 1.31 of its 

rules. 

The Commission adopts a new 

section, § 425.8. Pursuant to this 

provision, and consistent with the 

Commission’s Rules of Practice, sellers 

and other covered persons may seek full 

or partial exemptions if they can 

demonstrate application of the Rule’s 

requirements to a particular product or 

service, or class of product or service, is 

not necessary to prevent the acts or 

practices to which the Rule relates. 

2. New § 425.9 Severability 

One commenter, NFIB, asked the 

Commission to address severability in 

the Rule.505 Specifically, NFIB proposed 

a provision stating if a court finds any 

part of the Rule to be invalid, then the 

remainder of the Rule remains in force. 

The Commission agrees with this 

proposal. It is the Commission’s intent 

that the provisions of the final Rule are 

separate and severable from one 

another; therefore, if any provision is 

stayed or determined to be invalid, the 

remaining provisions shall continue in 

effect. Thus, the final Rule includes this 

language in a new section, § 425.9.506

B. Notice of Material Changes 

In the NPRM, the Commission sought 

comment on whether and how sellers 

should notify consumers when they 

make material changes to contracts with 

a negative option.507 As discussed in the 

NPRM, several commenters responding 

to the ANPR recommended the 

Commission require sellers to send 

consumers notices of such changes. 

TINA, for example, asserted the 

Commission should require such notice 

and provide consumers an opportunity 

to cancel before the terms become 

effective.508 Several States require 

similar notices.509 The Commission, 

however, did not require notice of 

material changes in the proposed Rule. 

As it explained at the time, whether a 

seller’s failure to provide such notice is 

unfair or deceptive is a highly factspecific inquiry that must be 

determined on a case-by-case basis. 

Given the importance of the issue, 

however, the Commission requested 

further comment. 

1. Summary of Comments 

Five commenters responded.510 TINA 

reiterated sellers should provide 


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511TINA, FTC–2023–0033–1139. 

512 Id. 

513 Id. 

514 IAB, FTC–2023–0033–1000; ESA, FTC–2023– 

0033–0867. 

515USTelecom, FTC–2023–0033–0876. 

516ACA, FTC–2023–0033–0881. 

517See NPRM. 88 FR 24730; NFIB, FTC–2023– 

0033–0789 (requesting a business education 

enforcement provision); Hoofnagle, FTC–2023– 

0033–1137 (consumer and business education 

probably uneconomical intervention). 

518 IAB, FTC–2023–0033–1000 (at least 12 

months); ESA, FTC–2023–0033–0867 (12–18 

months); Kuehn, FTC–2023–0033–0871 (12–18 

months). 

519Chamber, FTC–2023–0033–0885. 

520 Individual commenter, FTC–2023–0033–0257; 

Individual commenter, FTC–2023–0033–0685. 

521ACA, FTC–2023–0033–0881; SCIC, FTC– 

2023–0033–0879 (noting many States require 

service contract forms be filed with State regulators 

for approval); ANA, FTC–2023–0033–1001; NCTA, 

FTC–2023–0033–0858. 

522NCTA, FTC–2023–0033–0858. 

523E.g., 38 FR 33766 (Dec. 7, 1973) (original 

Negative Option Rule, 6-month grace period); 60 FR 

43842 (Aug. 23, 1995) (TSR. 4-month grace period); 

89 FR 26767 (Apr. 16, 2024) (TSR amendment, 180- 

day grace period); 79 FR 55615 (Sept. 17, 2014) 

(Merchandise Rule amendments, 3-month grace 

period). 

524Similarly, the various procedural sections of 

the Rule, e.g., § 425.1 (Scope), § 425.2 (Definitions); 

§ 425.7 (Relation to State Laws), § 425.8 

(Exemptions), and § 425.9 (Severability) are also 

operative 60 days after publication. 

consumers with notice of material 

changes to subscription terms.511

Further, it asserted the Commission’s 

reasoning is at odds with State laws and 

the Commission’s longstanding position 

on material terms, i.e., that they be 

‘‘clearly and conspicuously disclosed 

when relevant to the marketing being 

presented.’’ 512 TINA further argued 

allowing businesses to ‘‘hide’’ material 

changes to these contracts is likely to 

cause injury because consumers ‘‘do not 

read these contracts (let alone monitor 

them for changes) and a significant 

minority of consumers are not even 

aware they are bound by these 

subscription contracts.’’ 513

In contrast, ESA, USTelecom, ACA, 

and IAB supported the Commission’s 

proposal. IAB and ESA said it is 

‘‘industry practice for subscriptionbased services and products to have 

regular price increases over time,’’ and 

consumers expect it.514 USTelecom 

agreed with the Commission’s rationale 

that ‘‘whether such a practice is unfair 

or deceptive depends heavily on the 

facts presented in each case.’’ 515 ACA, 

a telecommunications trade association, 

noted the FCC and States already have 

notice requirements for contract term 

changes.516

2. Analysis 

Based on the record, the Commission 

does not require notice of material 

changes to contract conditions in the 

final Rule. The final Rule requires the 

seller disclose important information 

prior to charging the consumer. Such 

information includes all material terms, 

including, e.g., the range of costs the 

consumer will be charged and the 

frequency of charges that will incur 

unless the consumer takes timely steps 

to prevent or stop them. The seller’s 

failure to disclose such information 

upfront, clearly and conspicuously, 

violates the Rule. 

Moreover, State laws have different 

predicate requirements (e.g., less robust 

initial disclosures) and, importantly, are 

often based on different legal authority. 

Additionally, the Commission’s final 

Rule does not conflict with its 

longstanding advice on clear upfront 

disclosure. The final Rule requires just 

such disclosure, § 425.4; and the 

Commission has never required after 

sale disclosure based on its section 5 

authority. 

Finally, as the Commission explained 

in the NPRM, whether a seller’s failure 

to notify a consumer of material changes 

is unfair or deceptive could be heavily 

dependent on the particular facts and 

circumstances, such as the seller’s 

upfront marketing claims. For example, 

based on a clear upfront agreement to 

allow periodic price increases, 

consumers may understand that firms 

can make small price increases over 

long periods of time. On the other hand, 

significant unilateral changes to the 

terms of the agreement, such as huge 

prices increases over short periods of 

time would probably be inconsistent 

with reasonable consumer expectation, 

and therefore, deceptive or unfair. 

Because the determination of whether a 

practice runs afoul of section 5 in this 

context is highly fact dependent, the 

Commission declines to address it at 

this time. Nevertheless, the Commission 

will continue to monitor the need for 

such a requirement and will continue to 

bring enforcement actions when 

appropriate. 

C. Consumer Education 

The Commission solicited comments 

on alternative approaches such as 

additional consumer and business 

education, and received two comments 

in response.517 The Commission plans 

to continue its efforts to provide 

information to help consumers with 

their purchasing decisions and avoid 

ensnarement in unwanted recurring 

payment programs. However, consumer 

education is not a substitute for 

improving existing regulatory 

provisions. Consumer education is 

likely to have a limited benefit where 

sellers lure consumers into an 

agreement without consumers’ 

knowledge, particularly with the use of 

dark patterns. 

D. Implementation Date 

Several industry groups and one 

individual commenter asked the 

Commission to delay the final Rule’s 

effective date. Three commenters sought 

a delay of at least 12 months or up to 

18 months, citing generalized concerns 

that changes can take time ‘‘given the 

complexities’’ of the proposed Rule.518

The Chamber asked for a two-year 

period ‘‘depending on the scope and 

specific requirements of the final 

rule.’’ 519 By contrast, consumers 

generally encouraged the Commission to 

enact the Rule without delay.520

None of the commenters identified a 

precise period it would take to comply 

with a specific provision or otherwise 

detailed what would necessitate a 

particular length of time.521 They did, 

however, detail the general actions they 

would need to take. For example, NCTA 

explained, ‘‘this proposal would require 

companies to change and update their 

customer processes and user interfaces 

to provide the mandated notices, obtain 

additional consent, and implement 

cancellation mechanisms,’’ as well as 

troubleshoot those changes in a careful 

way to avoid ‘‘glitches and issues that 

would affect service and frustrate and 

harm consumers.’’ 522

The Commission recognizes changes 

to processes and disclosures typically 

require some time to address and has 

regularly provided a grace period for 

implementation of its rules.523 Small 

businesses in particular may require 

time to ensure their modified processes 

conform to the Rule. To address these 

concerns, the final Rule provides 180 

days from the date the final Rule is 

published to come into full compliance. 

However, sellers must comply with 

§ 425.3 60 days after publication of the 

Rule, consistent with 5 U.S.C. 801(a)(3). 

This section prohibits 

misrepresentations in connection with a 

negative option feature. Existing law 

already requires sellers not to make 

misrepresentations. Therefore, this 

provision should not impose an added 

time or cost burden on businesses 

operating lawfully.524

The Commission recognizes the 

remainder of the final Rule may require 

some businesses to implement or 

modify systems, software, or 

procedures. As detailed in the NPRM, 

however, the existing legal landscape 

already includes a patchwork of 

relevant Federal laws and regulations in 


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525NPRM, 88 FR 24716–18. 

526See EPS, 86 FR 60822; Staff Report, https://

www.ftc.gov/sites/default/files/documents/reports/ 

negative-options-federal-tradecommissionworkshop-analyzing-negative-optionmarketingreport-staff/p064202negativeoptionreport.pdf {last 

visited on Aug. 26, 2024}. 

527See sections VII.B.6 (saves) and VII.B.7 

(reminders). 

528See § 425.5(a)(4). 

529See § 425.4. 

530Law Professors, FTC–2023–0033–0861. 

531 Id. 

532Recommended Decision by Presiding Officer, 

https://www.regulations.gov/comment/FTC-2024- 

0001-0042. 

533Where specific components of the Rule, as 

anticipated when the NPRM was published, were 

discussed, commenters combined them, such that 

the concerns expressed cannot readily be separated 

to reflect what remains in the final Rule. For 

example, NCTA claims that ‘‘(t)he rigid ‘Click-toCancel’ requirements and limits on ‘saves’ will 

harm consumers,’’ but addresses these harms only 

in combined and qualitative ways. FTC–2023– 

0073–0008. 

534 15 U.S.C. 57a(a)(1)(B). 

addition to State laws to address sellers’ 

negative option practices.525 The 

Commission has also issued guidance to 

businesses on the basic requirements 

that negative option marketers must 

follow to avoid deception.526

Compliance with these statutes and 

regulations should mean sellers have a 

significant head start on their 

compliance efforts. 

Moreover, the Commission has 

streamlined the final Rule, significantly 

reducing the compliance burdens. 

Specifically, for reasons detailed in 

section VII, above, the final Rule omits 

or modifies proposed requirements that 

gave some commenters particular 

concern. Most notably, the Commission 

omitted the entire annual reminder and 

saves requirements. As commenters 

pointed out, these two sections imposed 

the greatest compliance burdens on 

sellers.527 Their removal, therefore, 

should substantially reduce the time 

and expense needed to ensure processes 

comply. 

Similarly, other modifications should 

clarify and streamline requirements, 

making compliance easier. For example, 

the final Rule eliminates certain 

recordkeeping requirements.528

Additionally, the final Rule narrows the 

required disclosures.529 These changes 

combined with existing law obviate the 

need for a lengthy grace period. 

E. Anti-Abuse Provision 

The Law Professors suggested the 

Commission include an ‘‘anti-abuse’’ 

provision to provide a mechanism for 

enforcement against sellers’ attempts to 

evade the Rule.530 Such a provision 

would make it an ‘‘unfair or deceptive 

act or practice’’ for a seller to, for 

example, set up a facially complicated 

sign-up process to allow for a similarly 

complicated cancellation process, but in 

practice to simplify the sign-up process 

to maximize enrollment.531 As the Law 

Professors acknowledge, such attempts 

to evade the Rule already violate the 

Rule, and the record does not suggest a 

need for such an additional anti-abuse 

provision. 

IX. Congressional Review Act 

Pursuant to the Congressional Review 

Act, 5 U.S.C. 801 et seq., we anticipate 

the Office of Information and Regulatory 

Affairs will designate the final Rule as 

a ‘‘major rule,’’ as defined by 5 U.S.C. 

804(2). 

X. Final Regulatory Analysis 

Under section 22(a) of the FTC Act, 15 

U.S.C. 57b–3(a), the Commission must 

issue a preliminary regulatory analysis 

for a proceeding to amend a rule if the 

Commission: (1) estimates that the 

amendment will have an annual effect 

on the national economy of $100 

million or more; (2) estimates that the 

amendment will cause a substantial 

change in the cost or price of certain 

categories of goods or services; or (3) 

otherwise determines that the 

amendment will have a significant effect 

upon covered entities or upon 

consumers. Although the Commission 

preliminarily determined the proposed 

amendments to the Rule would not have 

such effects on the national economy; 

on the cost of goods and services offered 

for sale by mail, telephone, or over the 

internet; or on covered parties or 

consumers, several commenters raised 

concerns with the Commission’s 

preliminary determination. Ultimately, 

the presiding officer determined, after 

receiving additional comments from 

interested stakeholders, the proposed 

amendments would have such effect.532

In accordance with section 22, the 

Commission therefore issues its final 

regulatory analysis below. 

A. Introduction 

Under section 22 of the FTC Act, 15 

U.S.C. 57b–3, the final regulatory 

analysis must contain (1) a concise 

statement of the need for, and objectives 

of, the final rule; (2) a description of any 

alternatives to the final rule which were 

considered by the Commission; (3) an 

analysis of the projected benefits, any 

adverse economic effects, and any other 

effects of the final rule; (4) an 

explanation of the reasons for the 

determination of the Commission that 

the final rule will attain its objectives in 

a manner consistent with applicable law 

and the reasons the particular 

alternative was chosen; and (5) a 

summary of any significant issues raised 

by the comments submitted during the 

public comment period in response to 

the preliminary regulatory analysis, and 

a summary of the assessment by the 

Commission of such issues. 

The Commission received comments 

from trade associations regarding the 

preliminary regulatory analysis in the 

NPRM, and three presented testimony 

and expert reports at the informal 

hearing. Comments and testimony, 

including reports submitted by experts, 

were largely conclusory in nature.533

The general theme of the comments and 

testimony, however, was that the 

compliance costs would be higher than 

those estimated in the NPRM’s 

preliminary analysis, and the 

Commission herewith presents revised 

estimates of those compliance costs. 

B. Regulatory Analysis 

1. Concise statement of the need for, 

and the objectives of, the final Rule. 

As discussed previously, the objective 

of the proposed amendments is to curb 

deceptive or unfair negative option 

practices . The legal basis for the 

proposed amendments is section 

18(a)(1)(B) of the FTC Act, which 

provides the Commission with authority 

to issue ‘‘rules which define with 

specificity acts or practices which are 

unfair or deceptive acts or practices in 

or affecting commerce.’’ 534

As described in this SBP, the 

amendments address unfair or deceptive 

negative option practices. The FTC, 

other Federal agencies, and State 

attorneys general have brought multiple 

administrative and judicial actions to 

stop and remedy harmful negative 

option practices. The record 

demonstrates, however, that existing 

legal authorities fall short because they 

leave consumers unprotected from 

certain practices and constrain the relief 

the Commission may obtain for law 

violations to redress consumers and 

deter future unlawful activity. In the 

ANPR and NPRM, the Commission 

explained it receives thousands of 

consumer complaints a year related to 

negative option marketing. 

As discussed above in sections III–VII, 

the final Rule clarifies existing 

requirements regarding negative option 

marketing currently dispersed in other 

rules and statutes administered by the 

FTC and provides a consistent legal 

framework across media and offers. It 

also consolidates all requirements, such 

as those in the TSR and ROSCA, 

specifically applicable to negative 


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535As explained in section III of the SBP, several 

other statutes and regulations address harmful 

negative option practices. Section 5 of the FTC Act, 

which prohibits unfair or deceptive acts or 

practices, has traditionally served as the 

Commission’s primary mechanism for addressing 

deceptive negative option claims. ROSCA, the TSR, 

1the Unordered Merchandise Statute, and EFTA all 

address various aspects of negative option 

marketing. 

536The final Rule also requires that specific 

disclosures relating to negative option features be 

provided separately to consumers before consent is 

obtained, whereas the existing regulatory 

framework requires that all material terms of a 

negative option contract be disclosed in a clear and 

conspicuous manner. The new disclosure 

requirements will aid consumers in understanding 

both that they are entering a negative option 

contract and the terms and conditions of that 

contract, especially how they can cancel the 

contract and when such cancellation must occur to 

avoid future charges. No consumer testing of the 

final Rule’s disclosure requirements, relative to a 

‘‘control’’ of ‘‘clear and conspicuous’’ disclosure 

requirements under the existing regulatory baseline, 

has been done. Accordingly, it is not possible to 

quantify any incremental consumer comprehension 

of a negative option plan at the time a consumer 

provides consent to that plan that may result from 

the final Rule’s disclosure requirements. Moreover, 

some academic studies claim that ‘‘[n]ot only do 

consumers have a tendency to forget, but also a 

tendency to forget that they forget,’’ suggesting that 

any gain in comprehension of the negative option 

features of an agreement that might be measured 

under consumer testing might not be durable. See 

Sophia Wang, ‘‘One Size Does Not Fit All: The 

Shortcomings of Current Negative Option 

Legislation,’’ 26 Cornell J. of L. & Pub. Policy, 197, 

212 n.135 (2016) citing Keith M. Marzilli Ericson, 

‘‘Forgetting We Forget: Overconfidence and 

Memory,’’ 9 J. Eur. Econ. Assoc. 43 (2011). 

Additionally, if the disclosures required by the final 

Rule come to be viewed as ‘‘boilerplate’’ language 

that consumers rush through, or consumers 

consider those disclosures to be less salient than 

other aspects of the transaction, such as acquiring 

a free trial of a product or service, the final Rule’s 

disclosures may not offer any incremental benefit 

over existing ‘‘clear and conspicuous’’ because 

‘‘people have limited attentional resources and will 

overlook non-salient features of any transaction.’’ 

See Tess Wilkinson-Ryan, ‘‘A Psychological 

Account of Consent to Fine Print,’’ 99 Iowa L. Rev. 

1745 (2014). Concerns such as these are consistent 

with some consumer advocacy groups seeking 

amendments that would require a second round of 

consent to be obtained at the end of a free trial and 

before any recurring charges could be initiated in 

addition to routine reminders of recurring charges. 

See, e.g., TINA, FTC–2019–0082–0014 (seeking 

amendments to require notice and re-affirmance of 

consumer consent, prior to being charged because 

consumers may forget about the trial and incur 

unwanted charges or enrollments at the end of the 

offer, particularly with long trial periods). 

537The Unordered Merchandise Statute and 

EFTA also address various aspects of negative 

option marketing, but violations of those laws in 

relation to negative option marketing are typically 

pleaded in conjunction with violations of other 

laws; without loss of generality, the regulatory 

analysis expressly considers only ROSCA, the TSR, 

and section 5 as the regulatory baseline against 

which incremental benefits and costs from the final 

Rule are measured. 

option marketing. The final Rule also 

provides clarity about how to avoid 

deceptive negative option disclosures 

and procedures. For example, ROSCA 

lacks specificity about cancellation 

procedures and the placement, content, 

and timing of cancellation-related 

disclosures. The final Rule now 

provides clear standards for sellers 

about, inter alia, the content and timing 

of important information disclosures 

and what constitute ‘‘simple 

mechanisms’’ for the consumer to stop 

recurring charges. Further, the Rule 

allows the Commission to seek civil 

penalties and consumer redress under 

section 19(a)(1) of the FTC Act in 

contexts where such remedies are 

currently unavailable, such as deceptive 

or unfair practices involving negative 

options in print materials and face-toface transactions (i.e., in media not 

covered by ROSCA or the TSR). 

2. A description of any alternatives to 

the final Rule which the Commission 

considered. 

In formulating the final Rule, the 

Commission makes every effort to avoid 

imposing unduly burdensome 

requirements on sellers. To that end, the 

Commission avoids, where possible, 

proposing specific, prescriptive 

requirements that could stifle marketing 

innovation or otherwise limit seller 

options in using new technologies. In 

the NPRM, the Commission sought 

comments on several alternatives, 

including provisions related to consent 

requirements (additional consent for 

free trials) and reminder requirements 

(narrowing the scope of product types 

requiring reminders). The Commission 

also sought comments on how it could 

modify the proposed amendments to 

reduce costs or burdens for small 

entities. In response to the comments, 

and as discussed in the section-bysection analysis, the Commission 

determines not to finalize the proposed 

Rule in its entirety. Instead, the 

Commission finalizes a Rule that limits 

the material terms to be disclosed 

immediately adjacent to consent for the 

negative option feature; removes the 

limitation on saves and the 

accompanying recordkeeping 

requirement; removes the annual 

reminder provision; and modifies the 

length of the recordkeeping requirement 

for verification of consent to three years 

and provides an alternative method of 

compliance. 

One alternative to the final Rule 

would be to terminate the rulemaking 

and rely instead on the existing legal 

framework to combat unfair or 

deceptive negative option practices. 

Another alternative would be to limit 

the scope of the final Rule to just those 

negative option plans that are marketed 

in person or through the mail and 

therefore, currently, are covered only by 

section 5 of the FTC Act and not by 

ROSCA or the TSR. However, failing to 

proceed in accordance with the final 

Rule would substantially reduce or 

eliminate the benefits of the Rule, 

including clarifying the requirements 

currently spread throughout statutes 

and regulations and covering negative 

options in media not subject to the TSR 

or ROSCA. 

Given that the Commission expects 

the unquantified benefits and 

unquantified costs of the final Rule to be 

small, and that there is considerable 

scope for the net benefits to remain 

positive and large even if compliance 

costs have been substantially 

underestimated, this regulatory analysis 

indicates that adoption of the Rule will 

result in benefits to the public that 

outweigh the costs. 

3. An analysis of the projected 

benefits and any adverse economic 

effects and any other effects of the final 

Rule. 

(a) Summary of Benefits and Costs 

The primary consumer benefits of the 

final Rule, relative to the existing 

regulatory baseline,535 come in the form 

of faster cancellations when consumers 

wish to cancel subscriptions.536

The final Rule requires negative 

option sellers to provide cancellation 

mechanisms that are at least as easy to 

use as the mechanisms by which 

consumers consent to negative option 

plans. For negative option sales made 

online or over the telephone, ‘‘at least as 

easy to use’’ requires that the 

cancellation mechanism operate in the 

same medium and take no more time or 

effort than the consumer used when 

enrolling in the negative option plan. 

For negative option sales that are made 

in-person or through the mail, the final 

Rule requires that, in addition to 

offering cancellation through the 

specific method used for enrollment, the 

seller must also offer at least one 

alternate cancellation mechanism that 

can be used remotely, e.g., cancellation 

via a website, email, or a toll-free 

telephone number and, again, that the 

consumer can cancel the negative 

option contract at least as quickly as he 

or she completed enrollment in the 

negative option plan. 

In the following analysis, the 

Commission describes the anticipated 

effects of the final Rule. Where possible, 

it quantifies the benefits and costs. If a 

benefit or cost is quantified, it indicates 

the sources of the data relied upon. If an 

assumption is needed, the text makes 

clear which quantities are being 

assumed. The Commission measures the 

benefits and costs of the Rule against the 

existing regulatory baseline that consists 

primarily of ROSCA, the TSR, and 

section 5 enforcement.537


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538One survey found that consumers without 

subscriptions were much more pessimistic about 

the ability to cancel subscriptions than were 

consumers who had subscriptions. See Jabil, 

‘‘Connected Packaging Perceptions and Attitudes: A 

Consumer Insights Survey’’ (July 2021), https://

www.jabil.com/dam/jcr:ecdb74e6-c34f-4c30-aa34- 

c10269617db6/2021-connected-packagingsurvey.pdf#page=3. Another recent study finds that 

consumers are aware that they may be inattentive 

in future and not cancel subscriptions that they no 

longer desire, and so are less likely to sign up for 

negative-option subscriptions. See Klaus Miller, et 

al., ‘‘Sophisticated Consumers with Inertia: LongTerm Implications from a Large-Scale Field 

Experiment’’ (2023), https://papers.ssrn.com/sol3/ 

papers.cfm?abstract_id=4065098. 

539A large literature in economics has 

documented that consumers face switching costs 

and/or psychological biases towards inertia. See, 

e.g., Brigitte Madrian & Dennis Shea, ‘‘The Power 

of Suggestion: Inertia in 401(k) Participation and 

Savings Behavior,’’ 116 Quarterly J. of Econ. 1149 

(2001); William Samuelson and Richard 

Zeckhauser, ‘‘Status Quo Bias in Decision Making,’’ 

1 J. of Risk & Uncertainty 7 (1988). Research has 

found that many consumers do not cancel 

subscriptions due to such inertia effects. See, e.g., 

Miller, et al. (2023); Liran Einav, et al., ‘‘Selling 

Subscriptions’’ (2023), https://harris.uchicago.edu/ 

sites/default/files/mahoney_ppe_seminar_paper_9- 

26-23_0.pdf. 540See U.K. Department for Business and Trade, 

‘‘Impact Assessment—Digital Markets, Competition 

and Consumers Bill: Subscription Measures,’’ at 3 

(Apr. 20, 2023), https://publications.parliament.uk/ 

pa/bills/cbill/58-03/0294/ImpactAssessment

Annex2.pdf. 

541 In some instances, an online cancellation 

completed at, say, 11:59 p.m., compared to a 

counterfactual in which a call center closed at, say, 

8 p.m., could result in sparing a consumer from a 

recurring charge that would take effect the next day, 

and such instances would result in actual monetary 

Continued 

First, the likely per-cancellation 

benefits of the final Rule in relation to 

four scenarios under the existing 

regulatory baseline are considered. 

Next, the number of transactions 

relevant to each scenario are estimated. 

The product of average benefits-percancellation in each scenario multiplied 

by the likely number of consumer 

cancellation transactions for each 

scenario, summed across all scenarios, 

provides an estimate of the aggregate, 

quantifiable, consumer benefits 

produced by marketers’ compliance 

with the final Rule’s cancellation 

requirements. Quantifiable costs 

primarily reflect the resources spent by 

businesses to review the Rule and to 

take any preemptive or remedial steps to 

comply with its provisions, including, 

when and as needed, making changes to 

the manner they receive and process 

cancellation requests from consumers. 

The Commission estimates the 

present discounted value of quantified 

benefits over ten years, using a 2 percent 

discount rate, will range between $6.1 

and $49.3 billion. Annualized over 10 

years, the Commission estimates the 

quantified benefits will range between 

$682.8 million and $5.5 billion per year. 

The Commission estimates the present 

discounted value of quantified costs 

over ten years, using a 2 percent 

discount rate, will range between $100.9 

and $826.2 million. Annualized over ten 

years, the Commission estimates the 

quantified costs will range between 

$11.2 and $92.0 million per year. These 

estimates are presented in Table 1 

below. 

TABLE 1—SUMMARY OF TOTAL QUANTIFIED BENEFITS AND COSTS

[In millions, 2023 dollars] 

Low High 

Present Discounted Value over 10 years, 2% discount rate 

Benefits .................................................................................................................................................................... $6,133.57 $49,315.39 

Costs ........................................................................................................................................................................ 100.89 826.15 

Net Benefits ...................................................................................................................................................... 5,307.43 49,214.50 

Annualized over 10 years, 2% discount rate 

Benefits .................................................................................................................................................................... 682.83 5,490.11 

Costs ........................................................................................................................................................................ 11.23 91.97 

Net Benefits ...................................................................................................................................................... 590.86 5,478.88 

(b) Benefits of the Final Rule 

This section describes the beneficial 

impacts of the Rule, provides 

quantitative estimates where possible, 

and describes benefits that are only 

assessed qualitatively. 

The quantifiable estimates reflect 

benefits stemming from the decreased 

amount of time and effort consumers 

will need to expend cancelling 

subscriptions, and in contexts where 

data are available, welfare gains from 

avoided expenditure for unwanted 

subscriptions, under the final Rule 

relative to marketers’ compliance with 

the existing regulatory baseline. This 

section first estimates per-consumer 

savings from cancellation mechanisms 

that would become at least as easy to 

use as the mechanisms through which 

consent to the negative option 

transactions was given and then 

estimates the number of cancellation 

transactions to which those benefits 

apply. 

In addition to these quantified 

benefits, there are several benefits we do 

not quantify. First, marketers’ 

compliance with the final Rule is likely 

to improve consumer confidence in 

using subscriptions 538 and increase the 

number of consumers who are willing to 

subscribe and obtain the convenience, 

and often cost savings, that 

subscriptions can provide. Second, 

research in economics and psychology 

finds the perceived monetary and 

psychological costs from switching 

products or services can lead consumers 

to make sub-optimal decisions. The 

final Rule, by reducing these costs 

through simpler cancellation methods, 

may improve consumer decisionmaking by reducing enrollments in 

subscriptions that consumers do not 

value and increasing enrollments in 

subscriptions that they do value.539

Marketers’ compliance with the final 

Rule, and the consumer confidence that 

compliance inspires, may also ‘‘exert 

additional competitive pressures on 

businesses who offer subscription 

contracts (and) could increase 

productivity in the sector.’’ 540

Compliance with the final Rule may 

also result in some allocative effects 

when consumers can cancel online 

instead of by telephone. In such cases, 

consumers will be able to cancel 

subscriptions at times of the day that 

may be more convenient to them than 

the hours that subscription sellers staff 

their telephone lines and from devices 

that they find more convenient to use 

than telephones.541


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savings to consumers, but we are unable to estimate 

the frequency of such occurrences or the monetary 

savings they would engender. 

542See Michelle Hawley and Shane O’Neill, ‘‘21 

Important Call Center Statistics to Know About,’’ 

(Apr. 3, 2024), https://www.cmswire.com/contactcenter/16-important-call-center-statistics-to-knowabout. We use this proxy for the time a ROSCAcompliant telephonic cancellation takes only for the 

express purpose of estimating the incremental 

benefits to consumers of a final Rule-compliant 

cancellation replacing a ROSCA-compliant 

telephonic cancellation. ‘‘Average handle time’’ has 

not been used as a standard for ROSCA enforcement 

and is not intended to set a standard here. 

543The Commission uses a mean hourly wage rate 

of $31.48; see Bureau of Labor Statistics, ‘‘May 2023 

National Occupational and Wage Estimates, Unites 

States,’’ https://www.bls.gov/oes/current/oes_

nat.htm. A meta-analysis of studies on how 

consumers value time used in traveling (an area in 

which ‘‘a huge literature has arisen’’) has 

determined that consumers value time used in that 

matter at 82% of their wage rate. See Daniel S. 

Hamermesh, ‘‘What’s to Know About Time Use?,’’ 

30 J. Econ. Surv. 1, 198–203 (2015). The 

Commission assumes for the purpose of the final 

Rule consumers value transaction costs savings in 

the same way that they value travel time. 

544See Caroline Sinders, ‘‘How Companies Make 

It Difficult to Unsubscribe,’’ https://pudding.cool/ 

2023/05/dark-patterns. Among the obstacles noted 

for otherwise seemingly simple online cancellations 

were that some websites did not use straight 

forward terms, such as ‘‘unsubscribe’’ or ‘‘cancel,’’ 

and instead put the cancellation path under titles 

such as ‘‘auto-renew’’ or ‘‘edit plan.’’ 

545The researcher reported the aggregate time 

expended to cancel all 16 subscriptions was 57 

minutes and 31 seconds. Of the three subscriptions 

that required telephonic cancellations, one call took 

17 minutes and 36 seconds, one took seven 

minutes, and the time to cancel the third one was 

not reported (apart from explaining that it was 

necessary to call three times due to the seller’s 

‘‘technical difficulties’’). The Commission replaces 

this missing value with the average handle time 

found by Hawley/O’Neill (2024) of six minutes and 

three seconds. The Commission therefore 

subtracted 30 minutes and 39 seconds from the 

aggregate cancellation time of 57 minutes and 31 

seconds; measured in seconds, this becomes 

3,451¥1,839 = 1,612. Dividing this result by 13 

equals 124 seconds, or two minutes and 4 seconds. 

The Commission notes this average cancellation 

time, though relevant for this regulatory analysis, 

has not been used as a standard for ROSCA 

enforcement and is not intended to set a standard 

here. Moreover, while we have calculated this 

average, the study notes cancellation took under 

one minute for three large sellers of digital 

entertainment subscriptions. Last, the Commission 

notes one commenter opined, ‘‘(f)or the most part,’’ 

companies offer convenient, no-hassle, cancellation 

options that probably take about five clicks on 

average, though the commenter did not indicate a 

time duration. See Individual commenter, FTC– 

2023–0033–0780. 

Finally, the Commission’s estimates 

of quantified benefits are based on 

reductions in time and effort from 

cancelling subscriptions to non-business 

consumers. The Commission expects 

small businesses may also benefit in 

similar ways from less costly 

cancellations, but it does not quantify 

such benefits due to lack of data on 

business cancellation transactions. 

The following subsections then 

estimate the quantified benefits from 

reductions in time and effort from 

cancelling subscriptions. First, in 

subsection (1), the Commission 

estimates the per-cancellation benefit 

relative to the regulatory baseline for (i) 

online cancellation when only ROSCAcompliant telephonic cancellation was 

available, (ii) simpler online 

cancellation when only ROSCAcompliant online cancellation was 

available, (iii) simpler telephone 

cancellation when only TSR-compliant 

cancellation was available, and (iv) 

online or telephone cancellation when 

only in-person or mail cancellation was 

available. The Commission then 

estimates the number of cancellation 

transactions in subsection (2), and 

finally calculates benefits as the percancellation benefit in each scenario 

multiplied by the number of affected 

transactions in subsection (3). 

(1) Estimating Per-Cancellation Benefits 

For each of the four scenarios below, 

the Commission estimates a range of 

benefits that a consumer will gain each 

time they cancel a negative option 

subscription. In these scenarios, the 

Commission assumes a final Rulecompliant online cancellation should 

take no more than 30 seconds to one 

minute, based on the Commission’s 

experience that the average time for 

consumers to read required disclosures 

and provide consent to a negative 

option plan online is 30 seconds to one 

minute. For telephone cancellations 

under the final Rule, the Commission 

assumes that a rule-compliant 

cancellation should take no more than 

one to two minutes, based on the 

assumption it takes a telemarketer twice 

as long to read required disclosures to 

a consumer as it would take a consumer 

to read such disclosures to his or herself 

online. 

(a) Estimated Per-Cancellation Benefit 

Relative to ROSCA-Compliant 

Telephonic Cancellation 

For consumers enrolling in negative 

option plans online, the existing 

regulatory baseline, ROSCA, requires 

marketers to provide ‘‘simple’’ 

cancellation mechanisms. A facially 

ROSCA-compliant, ‘‘simple’’ telephonic 

cancellation may, nonetheless, require 

more time and effort from consumers 

than was expended when enrolling in 

the negative option plan. Online 

subscription sellers’ compliance with 

the final Rule will save consumers that 

extra measure of time and effort. 

To estimate the average time savings 

to consumers of a final Rule-compliant 

‘‘click-to-cancel’’ mechanism compared 

to a ROSCA-compliant simple 

telephonic cancellation, this analysis 

first assumes that ROSCA-compliant 

simple telephonic cancellations take no 

more time than the ‘‘average handle 

time’’ for all customer service requests 

made to call centers, which an industry 

source indicates is six minutes and 

three seconds.542 As discussed at the 

beginning of this subsection, the 

Commission assumes a final Rulecompliant cancellation should take no 

more than 30 seconds to one minute, 

saving consumers between five minutes 

and three seconds and five minutes and 

33 seconds per cancellation relative to 

a simple telephonic cancellation. 

The Commission then assumes 

consumers, on average, value their nonwork time at 82% of the mean hourly 

wage of $31.48, or $25.81 (i.e., .82 × 

$31.48) per hour.543 Accordingly, the 

Commission estimates the faster online 

cancellations the final Rule will 

provide, relative to ROSCA-compliant 

telephonic cancellations, will be valued 

at between $2.17 (i.e., 5:03 minutes × 

$25.81/hour) and $2.39 (i.e., 5:33 

minutes × $25.81/hour). 

(b) Estimated Per-Cancellation Benefit 

Relative to ROSCA-Compliant Online 

Cancellation 

For online cancellations of onlineentered subscriptions, the Commission 

lacks a source of average cancellation 

times presumed to be ROSCA-compliant 

that is as comprehensive as that used for 

the average handle times of call centers. 

The Commission relies, instead, on an 

experiment that involved signing up for 

16 online subscriptions between August 

2 to October 4, 2022, then canceling 

each one, and recording the time it took 

to cancel, as well as the variety of other 

obstacles faced in canceling.544 To 

estimate the average time for online 

cancellations, the Commission subtracts 

the time incurred in canceling the three 

subscriptions that required telephonic 

cancellation from the aggregate time 

reported to cancel all 16 subscriptions. 

This yields an average of two minutes 

and 4 seconds per online 

cancellation.545

Based on the Commission staff’s 

experience, the average time needed to 

read the required disclosures and 

provide consent to a negative option 

feature is 30 seconds to one minute. An 

online cancellation that took no longer 

than the provision of online consent 

would therefore save the consumer 

between one minute and four seconds 

and one minute and 34 seconds. 

Valuing consumers’ time at $25.81 per 


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546At the seller’s choice, an online cancellation 

method may be through a website or via email. 

547 IHRSA, The Global Health & Fitness 

Association, commenting on behalf of itself and the 

industry (see FTC–2023–0033–0863) claimed there 

were clear distinctions between in-person, brick 

and-mortar health and fitness businesses and online 

subscription services, explaining a month-to-month 

contract is a very different risk to consumers than 

a long-term contract that begins after a free trial or 

auto-renews without notice. IHRSA further claims 

short-term (e.g., month-to-month) continuous 

service agreements should be distinguished from 

purely online subscription services targeted by the 

rule. IHRSA further (mis-) characterizes the Rule as 

appearing to be concerned with paid contracts that 

initiate automatically after a free trial period or 

auto-renew without notice after a long, pre-paid 

initial term. IHRSA notes consumers with 

membership agreements with firms in its industry 

are on notice of the recurring cost because of the 

monthly charge and have the option to cancel each 

month under the terms of their contract. The 

Commission disagrees with IHRSA’s 

characterization of the Rule; the Rule is not 

intended to exclusively, or even primarily, address 

online subscription services or long-term contracts 

that begin after a free trial or auto-renew without 

notice, but to address all recurring charge plans 

where the consumer’s silence or failure to cancel is 

interpreted as consent to recurring charges. 

Accordingly, consumer memberships with firms in 

IHRSA’s industry where consumers have the option 

to cancel each month squarely fit within the Rule’s 

coverage of negative option plans. 

548 Individual commenter, FTC–2023–0033–0233. 

549The International Carwash Association 

(‘‘ICA’’), however, commented many of its 60,000 

U.S. members offer carwash subscriptions that offer 

a reduced price for carwashes to subscribers and 

strengthen the relationship with customers and 

reduce dependence on cash transactions for these 

businesses. See FTC–2023–0033–1142. These 

subscriptions may be purchased in person, on the 

world wide web, via a mobile app, or at an 

automated teller, which indicates at least some of 

those subscriptions are covered by ROSCA. ICA 

asserts cancellation through a means other than in 

person may be burdensome to the generally small 

businesses that operate carwashes. Id. Although 

commenter Rocket Money, FTC–2023–0033–0998, 

mentioned ‘‘car wash chains that require consumers 

to visit a specific location to cancel their 

membership as an example of draconian 

cancellation requirements they experienced 

working with consumers, no individual consumer 

commenter mentioned difficulties with carwash 

subscriptions. Because no consumer commenter 

provided any other indication of the number of 

carwash subscriptions purchased or the costs of 

cancelling such subscriptions, even anecdotally, 

they are excluded from the analysis. The estimate 

of the consumer benefits that would flow from the 

final Rule’s provision that an extra, remote, 

cancellation mechanism be required of marketers 

who currently offer only in person or mail 

cancellation mechanisms may therefore be an 

under-estimate of such benefits. 

550FTC–2023–0033–0863. 

hour, as assumed above, the final Rule 

would therefore save consumers who 

enroll online and cancel online time 

that they value at between $0.46 (i.e., 

1:04 seconds × $25.81/hour) and $0.67 

(i.e., 1:34 minutes × $25.81/hour). 

(c) Average Per-Cancellation Benefit 

Relative to TSR-Compliant Cancellation 

For consumers enrolling in negative 

option plans via telemarketing, the 

existing regulatory baseline is the TSR. 

The TSR does not specify a performance 

standard specific to negative option 

cancellations. Although egregious 

cancellation delays can be pleaded 

against telemarketers under 

§ 310.3(a)(1)(vii) (requiring disclosure of 

all material terms and conditions of the 

negative option feature) or 

§ 310.3(a)(2)(ix) (prohibiting 

misrepresentation directly or by 

implication of any material aspect of a 

negative option feature), the final Rule’s 

requirement that the cancellation 

mechanism be at least as easy to use as 

the consent mechanism provides 

cancellation-specificity to negative 

options sold through telemarketing that 

is lacking under the existing regulatory 

baseline. Because telemarketers have 

substantial discretion in designing and 

implementing consent processes 

specific to their programs, telemarketers 

will have a clear benchmark for the 

speed with which they must complete a 

final Rule-compliant cancellation. 

As described at the beginning of this 

subsection, the Commission assumes it 

takes telemarketers between one and 

two minutes to read the required 

disclosures to consumers and receive 

their consent for enrollment in a 

negative option plan. Using the same 

average handle time measure of six 

minutes and three seconds used a 

previous scenario to proxy for baseline 

time spent for a telephonic cancellation, 

the Commission assumes the final Rule 

will save consumers who consent to a 

negative option sale via telemarketing, 

and cancel in the same manner, between 

four minutes and three seconds and five 

minutes and three seconds. Evaluating 

that time saving in the same manner as 

above, compliance with the final Rule 

results in a per-cancellation time saving 

that is worth between $1.74 (i.e., 4:03 

minutes × $25.81/hour) and $2.17 (i.e., 

5:03 minutes × $25.81/hour). 

(d) Estimated Per-Cancellation Benefit 

Related to In-Person Enrollments 

Some sellers market negative option 

plans in ways that are not covered by 

ROSCA or the TSR. Those that involve 

in-person enrollment and only offer inperson or mail cancellation, in 

particular, may be highly burdensome to 

consumers. The final Rule requires 

sellers who offer in-person enrollment 

to offer at least one alternate 

cancellation method that consumers 

may use remotely, e.g., online 546 or via 

telephone. 

Providing consumers with an 

alternative to in-person cancellations 

will give consumers a faster route to 

cancel a subscription and may also 

spare some consumers from incurring 

additional recurring charges which 

might accrue during the pendency of a 

slow cancellation mechanism, enabling 

consumers to reallocate their spending 

power in directions of greater utility, 

resulting in allocative efficiencies. 

Unlike negative option transactions 

entered into online (ROSCA) or by 

telephone (TSR), the Commission lacks 

comprehensive experience with 

negative option plans that require 

cancellation in person or through the 

mail. However, because many gym/ 

fitness center/health studio 

memberships (hereafter, ‘‘gym 

memberships’’) are sold via negative 

options 547 and may require cancellation 

via certified mail or in person 

(sometimes even when consumers can 

enroll online 548), the Commission 

proxies the per-cancellation benefits of 

an additional, remote, method of 

cancellation by looking at those benefits 

in the context of gym memberships.549

As noted in the comment submitted 

by comment filed by IHRSA,550 The 

Global Health & Fitness Association, 

‘‘many (fitness club) operations allow 

several options for agreement 

termination through simple online 

solutions including online account 

management, email cancellation 

requests, and specific online 

cancellation buttons or forms’’ and 

‘‘[m]any of these options are currently 

available for members who have 

purchased their membership either 

online or in person.’’ IHRSA did not 

quantify the share of their member 

organizations that provide such 

cancellation opportunities or the 

number or share of consumer 

cancellation transactions in which 

online cancellation is available. 

Accordingly, the Commission assumes 

the low-end of the range of quantifiable 

benefits to consumers who purchased 

negative option plans in person, but 

could currently cancel online is the 

same as the same the low-end of the 

range for consumers who purchased 

negative option plans online and had 

access to online cancellations: $0.46 per 

cancellation. 

Notwithstanding IHRSA’s assertion 

that many fitness clubs offer online 

cancellation, at least 25 individual 

consumers submitted comments 

attesting to the difficulties of canceling 

gym memberships. Some wrote in 

general terms of the difficulties 

consumers experience in canceling such 

memberships as something that 

contributed to their support for the 

Rule. 


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551 Individual commenter, FTC–2023–0033–0780. 

552 Individual commenter, FTC–2023–0033–0007. 

553 Individual commenter, FTC–2023–0033–1046. 

554 Individual commenter, FTC–2023–0033–0741. 

555 Individual commenter, FTC–2023–0033–0233. 

556 Individual commenter, FTC–2023–0033–1076. 

557 Individual commenter, FTC–2023–0033–0510. 

558 Individual commenter, FTC–2023–0033–0968. 

559 Individual commenter, FTC–2023–0033–0387. 

560 Individual commenter, FTC–2023–0033–0572. 

561 Individual commenter, FTC–2023–0033–0299. 

562 Individual commenter, FTC–2023–0033–1163. 

563 Individual commenter, FTC–2023–0033–0545. 

564See Dana George, ‘‘This Is How Much the 

Average American Really Spends on Gym 

Memberships,’’ Jan. 7, 2024, https://www.fool.com/ 

the-ascent/personal-finance/articles/this-is-howmuch-the-average-american-really-spends-on-gymmemberships. Because this report is from January 

2024, the Commission assumes it measured gym 

membership costs in 2023 dollars. 

565Note the avoided recurring payments 

associated with delayed cancellations may overstate 

the amount of consumer surplus gained attributable 

to the final Rule if consumers continue to use their 

gym membership during that period of delayed 

cancellation. However, it is difficult to estimate the 

extent to which that occurs due to lack of data. A 

part of those gains may also be transfers of producer 

surplus from firms to consumers. 

566Other cancellation methods gyms may 

currently offer, such as in-person visits that succeed 

in cancellation and cancellation via certified mail, 

would fall in between these low/high endpoints, as 

would the benefits to consumers if those methods 

were augmented under the final Rule not with 

online cancellations but with telephonic 

cancellations. 

• ‘‘What seems more troublesome 

tend to be stuff like gym 

memberships.’’ 551

• ‘‘I work dispute resolutions for a 

bank. I see so many cases where 

someone is trying to cancel something 

like a gym membership and, while they 

can sign up in person, they for some 

reason have to mail a certified letter to 

the companies (sic) home office.’’ 552

• ‘‘I have experienced so much 

frustration ending memberships with 

gyms, online subscriptions, etc. over 

many years and welcome help in this 

matter. So many friends I speak to share 

similar stories of how they were roped 

into paying for longer memberships and 

subscriptions that they no longer 

wanted.’’ 553

• ‘‘Many places, like [specific fitness 

center chain], require you to go in 

person to cancel—they won’t even let 

you do it over the phone! This harms 

anyone that may have trouble leaving 

the house regularly, including disabled 

folks and parents of small children and 

those caring for older or ailing family 

members, not to mention being horribly 

inconvenient for everyone else.’’ 554

Many others conveyed personal 

experiences with burdensome gym 

membership cancellation. The 

Commission relies upon these 

comments to estimate the high-end of 

the range of quantifiable benefits that 

the final Rule will provide to consumers 

who purchase negative option plans inperson. Examples of these include: 

• ‘‘I had to write a letter and 

physically mail it to cancel a gym 

membership I singed [sic] up for on an 

iPad.’’ 555

• ‘‘Recently it took me three days and 

several hours to cancel a gym 

membership (that) had taken less than 

20 minutes to join, on line [sic].’’ 556

• ‘‘I had to go in person 3 different 

times because the manager wasn’t there 

so [sic] to cancel it.’’ This consumer 

attached a screen shot of the gym’s 

cancellation policy, which read, in part, 

‘‘There is no contract and you are free 

to cancel your Direct Debit at any time. 

If you do decide to cancel your 

membership, you must allow at least 7 

days before the fifth of the month to 

ensure your payment is cancelled and 

advise Reception of the cancellation.’’ 

Both ‘‘(a)t least 7 days before the fifth 

of the month,’’ and the failure to specify 

whether ‘‘7 days’’ is seven business days 

or seven calendar days introduce 

considerable uncertainty as to when, 

precisely, the consumer must tender a 

cancellation to avoid the next recurring 

payment.557

• ‘‘Years ago, I had signed up for a 

gym membership, and after a change in 

job situation, was no longer able to 

make use of it. Repeated attempts to 

reach the gym membership department 

and cancel my membership went 

unheeded—a [sic] got a classic 

runaround, and as often forwarded to 

unattended phone numbers—and I kept 

racking up monthly bills for a 

membership I didn’t want . . . . It was 

only through a personal relationship 

with someone who worked in the 

corporate office that I was finally able to 

get past their automatic renewals and 

effect a cancellation.’’ 558

• ‘‘We wanted to cancel the [gym] 

membership, but when we called and 

emailed, we were told we couldn’t 

cancel that way. We had to send a 

certified letter or go in person. We have 

gone in person twice to try to cancel or 

[sic] membership and it has been a 

nightmare.’’ 559

• ‘‘Personally, I have been impacted 

by my local gym’s undisclosed policies 

and shady cancelation policies that have 

costed me hundreds of dollars.’’ 560

• ‘‘They bill you monthly for your 

gym membership but when you want to 

cancel your membership that’s when the 

problems arise. You cannot do it over 

phone or on their website. You have to 

go into the gym personally to cancel 

said membership. Not only that I was 

told that I’d have to go to the gym [home 

gym] where I signed up in order to 

cancel membership. I could only 

imagine what this would be like had I 

moved out of the state. Please help us 

stop these practices.’’ 561

• ‘‘I am currently trying to cancel a 

gym membership and have been 

overwhelmed by how difficult it has 

been . . . . I just called my gym . . . 

and the pre-recorded automated 

answering message literally says there is 

no direct line to the gym! That’s 

outrageous!!!’’ 562

• ‘‘My personal experience is with 

my gym membership . . . . Getting out 

of it was terrible, and I’d hate to see it 

happen to anyone else.’’ 563

Based on these comments, the 

Commission makes the simplifying 

assumption that the worst gym 

membership cancellation experiences 

involve three failed attempts at 

cancellation, each costing one hour of 

time, and that, because of those 

cancellation failures, three unwanted 

monthly charges were processed. The 

Commission assumes a fourth 

cancellation attempt, also costing one 

hour of time, succeeds in halting the 

recurring payments. 

As above, the Commission values 

consumers’ time at $25.81/hour. The 

typical gym membership costs between 

$40 and $70 a month.564 The 

Commission therefore assumes, at the 

high-end, consumers incur gym 

membership cancellation costs of 

$313.25 (i.e., (4 × $25.81) + (3 × $70)) 

in the absence of this Rule.565 As stated 

previously, the Commission assumes a 

final Rule-compliant cancellation 

should take no more one minute at the 

high end, which has a value of 

consumers’ non-market time of $0.43. 

Then, to estimate the high-end avoided 

burden that such consumers would 

experience under the final Rule, the 

Commission takes the difference 

between the high-end cancellation costs 

in the absence of this Rule ($313.25) and 

the high-end final Rule-compliant 

cancellation costs ($0.43), which 

equates to $312.82. Accordingly, the 

low-to-high range of benefits provided 

by the final Rule to consumers who 

purchase negative option plans in 

person or through the mail ranges from 

$0.46 to $312.78.566

(e) Summary of Per-Cancellation 

Benefits 

Table 2 presents a summary of the 

per-cancellation benefit the Commission 

estimates would result from this final 

Rule. For subscriptions that are 

currently cancelled over the phone but 

would be cancelled online under this 

final Rule, the Commission estimates 


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567Although this final Rule also benefits small 

businesses that purchase negative option plans, the 

Commission does not have sufficient data to 

quantify those effects in this analysis. 

568See U.S. Census, ‘‘Demographic Turning 

Points for the United States: Population Projections 

for 2020 to 2060: Population Estimates and 

Projections,’’ Feb. 2020, https://www.census.gov/ 

library/publications/2020/demo/p25-1144.html. 

The Commission linearly extrapolated between the 

report’s figures for the population over the age of 

18 in 2020 and its estimates of the same population 

in 2030 to estimate the number of consumers in 

years 2025 through 2029. Similarly, the 

Commission linearly extrapolated between the 

report’s estimates of the over age 18 population in 

2030 and 2040 to estimate the over age 18 

population in the years 2031 through 2034. 

569See Julia Stoll, ‘‘SVOD service user shares in 

the U.S. 2015–2023’’ (Sept. 7, 2023) (noting 83 

percent of U.S. consumers used a subscription 

video-on-demand service in 2023), https://

www.statista.com/statistics/318778/subscriptionbased-video-streaming-services-usage-usa. 

570Bango, ‘‘Subscription Wars: Super Bundling 

Awakens,’’ at 4 (2024) (based on data from 5,000 

U.S. subscribers), https://bango.com/resources/ 

subscription-wars-super-bundling-awakens. 

571See Stripe, ‘‘Subscription churn 101: A 

complete guide for businesses’’ (Jan. 23, 2024), 

https://stripe.com/resources/more/subscriptionchurn-101. 

572 Id. (noting the choice often depends on your 

business cycle and how often you want to assess 

your performance). 

573Some consumers may welcome an 

‘‘involuntary’’ cancellation of a subscription, and 

other cancellations that payment processors 

perceive as ‘‘involuntary’’ may reflect consumers’ 

deliberate cancellation of a credit card as a means 

of escaping a subscription that was difficult to 

cancel. The Commission’s analysis nonetheless uses 

only the reported ‘‘voluntary’’ churn rate to avoid 

the possibility of over-estimating the consumer 

benefits of the final Rule. 

574Recurly, a subscription management platform 

used across multiple industries, reports an overall 

churn rate of 4.1% per month and parses this rate 

into that arising from voluntary cancellations, 3%, 

and involuntary cancellations, 1%, with, 

presumably, 0.1% lost to rounding. Recurly 

explains its methodology in producing these 

estimates is based on a sample of over 1,200 

subscription sites on the Recurly platform over 12 

months (January to December 2023); its churn rates 

are monthly, calculated by dividing the number of 

subscribers who churn during the month by the 

total number of subscribers and uses median, 25th, 

and 75th percentile values to eliminate outliers and 

provide a more accurate representation of the data 

in its view. See Recurly, ‘‘What is a good churn 

rate?,’’ https://recurly.com/research/churn-ratebenchmarks. Other payment processors report 

similar churn rates but provide fewer details on the 

Continued 

consumers would experience a benefit 

of between $2.17 and $2.39 per 

cancellation. For subscriptions that are 

currently cancelled online and would 

move to a simpler online cancellation 

under this Rule, the Commission 

estimates consumers would experience 

a benefit of between $0.46 and $0.67 per 

cancellation. For subscriptions that are 

currently cancelled over the phone and 

would move to a simpler telephone 

cancellation under this Rule, the 

Commission estimates consumers 

would experience a benefit of between 

$1.74 and $2.17 per cancellation. For 

subscriptions enrolled in person that 

would be required to provide online or 

telephone cancellation under this Rule, 

the Commission estimates consumers 

would experience a benefit of between 

$0.46 and $312.82 per cancellation. 

TABLE 2—ESTIMATES OF BENEFIT PER CANCELLATION

[In 2023 dollars] 

Low High 

Phone to Online Cancellation .................................................................................................................................. $2.17 $2.39 

Online to Simpler Online Cancellation .................................................................................................................... 0.46 0.67 

Phone to Simpler Phone Cancellation .................................................................................................................... 1.74 2.17 

In-Person to Online or Phone Cancellation ............................................................................................................. 0.46 312.82 

(2) Estimating the Number of Consumer 

Cancellation Transactions 

(a) Baseline Number of Subscriptions 

The Commission regards 

‘‘consumers’’ for the purposes of this 

analysis as the U.S. population over the 

age of 18; 567 this is estimated to be 269 

million in 2025,568 the first year in the 

ten-year period over which the 

Commission estimates the benefits and 

costs of the final Rule (‘‘Year 1’’). 

Because negative option sales are a 

form of marketing of goods and services, 

and not an industry or type of output, 

and because no occupational category is 

uniquely associated with negative 

option marketing, no publicly produced 

data source, such as the Economic 

Census, tracks the use of negative option 

marketing in the United States. 

Accordingly, the Commission must look 

to other data sources, to estimate the 

number of subscription cancellations 

and the channels through which 

consumer consent was obtained and 

cancellation mechanisms provided. 

To estimate the aggregate number of 

consumer cancellation transactions, the 

Commission relies upon a credible 

source that found that, as of mid-2023, 

83% of American consumers had at 

least one subscription.569 The 

Commission assumes, for the purposes 

of this analysis, that the percentage of 

American consumers with at least one 

subscription remains constant over ten 

years. Accordingly, in Year 1 the 

Commission assumes 223.27 million 

consumers (i.e., .83 × 269 million) have 

at least one subscription. 

To estimate the total number of 

subscriptions held by U.S. consumers 

the Commission looks to data on the 

average number of subscriptions per 

subscriber. One source, relying upon a 

large sample of U.S. consumers 

conducted in late 2023 and early 2024, 

reported, ‘‘[t]he average subscriber now 

has 4.5 subscriptions.’’ 570 The 

Commission therefore applies a 

multiplier of 4.5 to the number of 

consumers estimated to have at least 

one subscription to estimate the 

aggregate number of subscriptions held 

by consumers in each year. Continuing 

with the Year 1 example from above, the 

Commission assumes the 223.27 million 

U.S. consumers who have subscriptions 

collectively hold 1,004,715 

subscriptions (i.e., 223.27 million × 4.5). 

The Commission acknowledges some 

uncertainty in these estimates which 

could lead to overestimation since 

subscriptions may be held by 

households of multiple individual 

consumers or underestimation due to 

potential growth in subscription-based 

goods and services. 

(b) Baseline Number of Cancellations 

The Commission next considers how 

many subscriptions consumers may 

want to cancel. To do so, we look to 

subscription ‘‘churn,’’ or cancellation, 

rate data. Churn rates can reflect 

intentional cancellations as when a 

consumer completes a merchant’s 

cancellation process, but can also reflect 

involuntary or passive cancellations, 

which occur when the payment 

mechanism the consumer has on file 

with the merchant is unable to be 

processed by the merchant.571 Churn 

rates may be calculated on a monthly, 

quarterly, or annual basis,572 and some 

rates do not disclose a time dimension; 

mischaracterizing a monthly churn rate 

as an annual churn rate could vastly 

underestimate the volume of annual 

cancellations. 

One source reports an aggregate 

measure of voluntary 573 churn of 3% 

per month.574 The Commission assumes 


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data underlying their churn rate estimates or do not 

distinguish voluntary from involuntary churn rates. 

575Because consumers may cancel a subscription 

and then enroll in a different subscription (or even 

re-enroll in a recently canceled subscription), the 

Commission assumes average, aggregate, monthly 

voluntary churn rates are additive across months 

and that the number of consumers with 

subscriptions do not ‘‘decay’’ at a rate of 3% per 

month. Indeed, another report found one-quarter of 

U.S. consumers cancelled a streaming video service 

in the past 12 months and resubscribed to the same 

service, with younger generations significantly 

more likely to return. See Deloitte, Digital Media 

Trends Survey: 16th Edition (2022), https://

www2.deloitte.com/us/en/insights/industry/ 

technology/digital-media-trends-consumptionhabits-survey/summary.html. The Deloitte report 

also notes the average churn cancellation rate has 

remained consistent since 2020 at about 37% across 

all paid streaming video on demand services. 

Similarly, a comment from NCTA, FTC–2023– 

0073–0008, quotes Congressional testimony from 

Consumer Reports that 36% of consumers who 

subscribed to streaming services, switched and 

resubscribed multiple times over a period of 12 

months. 

576The Commission is aware a recent survey of 

U.S. subscribers found 75% identified one 

subscription as one they will never cancel or even 

pause. See Bango (2024) at 8. The Commission 

assumes no adjustment is needed to the reported 

‘‘churn’’ rate in light of this finding as subscriptions 

with such loyalty are already reflected in the 

denominator of the reported churn rate. 

577See ‘‘28 Gym Membership Statistics: Average 

Cost of Memberships,’’ Renew Bariatrics (Jan. 4, 

2024), https://renewbariatrics.com/gymmembership-statistics/. 

578See ‘‘Why Health Club Retention Requires a 

Technology Solution,’’ IHRSA (May 20, 2019), 

https://www.healthandfitness.org/improve-yourclub/why-health-club-retention-requires-atechnology-solution/#:∼:text=

Acquiring%20a%20new%20customer

%20is%20five%20times,rates

%20by%205%%20increases%20profits

%20from%2025%%2D95%. 

579This tally does not include ongoing matters or 

matters that obtained ‘‘fencing-in’’ relief 

encompassing the sale of negative options without 

expressly pleading complaint counts related to 

cancellation mechanisms. 

580 In many instances, ROSCA and TSR counts 

were cross-pled as section 5 counts; in parsing 

cancellation transactions by their enrollment 

methods, we use ‘‘section 5’’ to refer to instances 

in which neither ROSCA nor TSR violations were 

pled. 

581For ease, the Commission includes in this tally 

two negative option plans that enrolled consumers 

via phone apps. Similarly, the Commission regards 

matters involving online marketing of negative 

options that were resolved before the passage of 

ROSCA (and some others that were resolved after 

the passage of ROSCA, but addressed online 

this rate is constant from month to 

month and from year to year and 

therefore assume that the average 

annual churn rate across all 

subscriptions is 36%.575 This churn 

rate, multiplied by the number of 

subscriptions held by consumers each 

year, provides the yearly estimate of 

how many subscriptions are cancelled 

by consumers.576 Continuing with the 

Year 1 example from above, the 

Commission therefore estimates 361.70 

million cancellations (i.e.,.36 × 1,004.72 

million) will occur in Year 1 of the 

analysis and that this number will 

increase to 384.82 million by Year 10. 

Table 3 presents the number of 

subscriptions and total number of 

cancellations expected in each year. 

TABLE 3—NUMBER OF SUBSCRIPTIONS

AND TOTAL CANCELLATIONS PER YEAR

[In millions] 

Year Subscriptions Cancellations 

1 ................ 1,004.72 361.70 

2 ................ 1,012.48 364.49 

3 ................ 1,020.25 367.29 

4 ................ 1,028.02 370.09 

5 ................ 1,035.79 372.88 

6 ................ 1,043.56 375.68 

7 ................ 1,049.91 377.97 

8 ................ 1,056.26 380.25 

9 ................ 1,062.61 382.54 

10 .............. 1,068.96 384.82 

(c) Number of Cancellations by 

Enrollment and Baseline Cancellation 

Method 

As discussed in the estimates of percancellation benefits, the estimated percancellation benefits stemming from the 

final Rule depend on the regulatory 

baseline cancellation methods relative 

to those that would be made available 

under the final Rule. To determine the 

number of cancellations for which the 

four categories of per-cancellation 

benefits estimates would apply, the 

Commission uses data on its 

enforcement experience to determine 

the share of cancellations likely to occur 

through online and telephone methods. 

For cancellations of subscriptions that 

are enrolled in person, the Commission 

uses data on gym membership 

cancellations as a proxy. 

(i) In-Person Subscriptions 

As a proxy for the number of 

subscriptions entered into in person, the 

Commission uses a report from Renew 

Bariatrics that claims 19 percent of the 

U.S. population are members of gyms or 

health clubs.577 The Commission 

assumes gym members are uniformly 

distributed by age and multiplies the 

U.S. adult population by 19 percent to 

estimate that 51.11 million adults will 

have active gym membership 

subscriptions when this final Rule goes 

into effect. An IHRSA article from 2019 

stated the average health club has an 

annual attrition rate of 28.6 percent.578

Interpreting this to mean 28.6 percent of 

all adult gym members cancel their 

memberships each year, the 

Commission estimates 14.62 million 

gym membership subscriptions will be 

cancelled in the first year of this Rule. 

In Year 10, the Commission estimates 

15.55 million gym membership 

subscriptions will be cancelled. The 

Commission uses these estimates as a 

proxy for the total number of 

subscriptions that are entered into in 

person and cancelled each year. 

The Commission acknowledges 

several limitations with this proxy. To 

begin, there are likely many other types 

of businesses, such as car washes, lawn 

care, pest control, and personal care and 

grooming establishments, that may offer 

in-person subscription enrollment. To 

the extent these subscriptions are not 

included in the count, the estimates 

may be understated. Further, the source 

that states 19 percent of the population 

are members of gyms does not specify 

the age distribution of the gym 

members. The Commission has assumed 

children and adults are distributed 

uniformly across that 19 percent; 

however, if adults are more likely to 

have gym memberships than children, 

the estimates of gym memberships and 

cancellations among adults will be 

understated. On the other hand, gym 

memberships are not always individual 

memberships; multiple family members 

may share a single-family membership. 

In estimating the number of gym 

memberships and cancellations, the 

Commission has assumed each adult 

gym member has their own 

subscription, which may overestimate 

the number of subscriptions and 

cancellations. 

(ii) Online and Telephone Subscriptions 

The Commission assumes all 

subscriptions that are not entered into 

in person are instead entered into either 

online or over the phone. Subtracting 

the in-person subscription, as proxied 

by gym membership cancellations, from 

the total number of cancellations, the 

Commission estimates 347.08 million 

subscriptions entered into either online 

or over the phone will be canceled in 

the first year of this Rule. This number 

would increase to 369.27 million 

cancellations in Year 10. 

To estimate the distribution of 

cancellation methods for these 

subscriptions that are entered into 

online and over the phone, the 

Commission reviewed matters it has 

brought and resolved 579 in which 

complaints specifically alleged negative 

option cancellation mechanisms that 

violated ROSCA, the TSR, or section 

5.580 The Commission found 54 matters 

met these criteria. 

Online 581 enrollment was possible in 

42 of 54 matters that met the review 


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marketers’ conduct that occurred prior to the 

passage of ROSCA), as ROSCA matters for the 

purposes of assessing the incremental benefits of 

the final Rule relative a regulatory baseline of 

ROSCA’s simple cancellation mechanism. 

582 In a few of these matters, online cancellation 

was offered in addition to telephonic cancellation, 

and to simplify the analysis, the Commission 

attributed half to the measure of telephonic 

cancellations and half to the measure of online 

cancellations. In a few other instances the 

Commission’s designation of ‘‘online’’ cancellation 

includes cancellation by email or within the 

marketer’s app. 

583 In contrast, other evidence indicated that 

81.25% of U.S. online marketers offered online 

cancellation. See, e.g., Sinders (2023). Different 

research looked at nine U.S. news media publishers 

that sold subscriptions online. When two 

‘‘personas’’ created by the researchers subscribed to 

each of the nine publications, and then attempted 

to cancel, 17 of the 18 subscriptions could be 

canceled online; one publication permitted only the 

California resident persona to cancel online and 

offered only telephonic cancellation to the persona 

posing as a Texas resident. See Ashley Sheil, et al., 

‘‘Staying at the Roach Motel: Cross-Country 

Analysis of Manipulative Subscription and 

Cancellation Flows,’’ in Mueller, F.F. (ed.), CHI ‘24: 

Proceedings of the CHI Conference on Human 

Factors in Computing Systems (May 11–16, 2024), 

https://repository.ubn.ru.nl/handle/2066/30690. 

584 In some of the 36 matters, no cancellation 

method was disclosed by the seller, and in a few 

other matters consumers were required to return 

merchandise through the mail to prevent a free trial 

from rolling over into a subscription or to obtain a 

refund for merchandise that was shipped to a 

consumer, and for which the consumer was 

charged. Such instances generally occurred before 

the passage of ROSCA, and it is highly unlikely that 

an online marketer who offered only a mailed-in 

cancellation could be in compliance with ROSCA’s 

requirement that cancellation mechanisms be 

‘‘simple.’’ Without loss of generality, the 

Commission therefore treats instances in which 

online cancellation was not offered as instances in 

which only telephonic cancellation was offered to 

consumers. 

585Some required the return of merchandise 

through the mail if consumers wanted refunds. In 

two matters, no cancellation mechanism was 

revealed. Without loss of generality, we assume that 

cancellation could take place telephonically. 

criteria. In the remaining 12 matters, 

enrollment occurred over the phone. 

Among the 42 matters in which online 

enrollment was possible, only six firms 

offered online 582 cancellation,583 and 

the remaining 36 firms offered only 

telephonic cancellation.584 Among the 

12 matters in which enrollment 

occurred over the telephone; none of the 

firms offered online cancellation, 

therefore, the Commission treats these 

12 matters as if only telephone 

cancellation was available.585 To 

summarize, the Commission finds that, 

among subscriptions that are entered 

into online and over the phone, 66.7 

percent (i.e., 36/54) offered online 

enrollment and only telephone 

cancellation, 11.1 percent (i.e., 6/54) 

offered online enrollment and online 

cancellation, and 22.2 percent (i.e., 12/ 

54) offered telephone enrollment and 

telephone cancellation. Extrapolating 

the baseline cancellation methods from 

enforcement matters may weight the 

online enrollment/telephone 

cancellation subscriptions and the 

telephone enrollment/telephone 

cancellation subscriptions more heavily 

than is currently experienced in the 

market. It also assumes that there are no 

subscriptions offered in the baseline 

with cancellation methods that are 

already compliant with the provisions 

of this Rule. The Commission explores 

the impacts of these limitations in a 

sensitivity analysis in section (d). 

Multiplying the distribution of 

cancellation methods for subscriptions 

entered into online and over the phone 

by the total number of cancellations of 

online and telephone subscriptions, the 

Commission estimates the annual 

number of cancellations that fall into 

each of these categories. In Year 1, the 

Commission estimates that, in the 

absence of this final Rule, there would 

be 231.39 million cancellations by 

telephone of subscriptions entered into 

online, 38.56 million online 

cancellations of subscriptions entered 

into online, and 77.13 million telephone 

cancellations of subscriptions entered 

into over the phone. 

(iii) Summary of Subscription 

Cancellations by Enrollment and 

Baseline Cancellation Method 

Table 4 provides the number of 

subscription cancellations each year 

distributed across the four enrollment 

and regulatory baseline cancellation 

method categories: online enrollment 

and telephone cancellation; online 

enrollment and online cancellation; 

telephone enrollment and telephone 

cancellation; and in-person enrollment. 

TABLE 4—CANCELLATIONS BY ENROLLMENT AND BASELINE CANCELLATION METHOD

[In millions] 

Year 

Online 

enrollment, 

telephone 

cancellation 

Online 

enrollment, 

online 

cancellation 

Telephone 

enrollment, 

telephone 

cancellation 

In-person 

enrollment 

1 ....................................................................................................................... 231.39 38.56 77.13 14.62 

2 ....................................................................................................................... 233.18 38.86 77.73 14.73 

3 ....................................................................................................................... 234.96 39.16 78.32 14.84 

4 ....................................................................................................................... 236.75 39.46 78.92 14.96 

5 ....................................................................................................................... 238.54 39.76 79.51 15.07 

6 ....................................................................................................................... 240.33 40.06 80.11 15.18 

7 ....................................................................................................................... 241.79 40.30 80.60 15.27 

8 ....................................................................................................................... 243.26 40.54 81.09 15.37 

9 ....................................................................................................................... 244.72 40.79 81.57 15.46 

10 ..................................................................................................................... 246.18 41.03 82.06 15.55 

(3) Total Quantified Benefits 

To estimate total benefits from this 

final Rule, the Commission first matches 

the enrollment and baseline 

cancellation method categories from the 

previous section to the four scenarios 

used to estimate the per-cancellation 

benefit. The Commission assumes that, 

under this final Rule, subscriptions 

enrolled online and cancelled over the 

phone in the baseline would move to 

online cancellations; subscriptions 

enrolled online and cancelled online 

would move to simpler online 

cancellation; subscriptions enrolled 

over the phone and cancelled over the 

phone would move to simpler telephone 

cancellation; and subscriptions enrolled 

in person would allow online or phone 

cancellation. 

Next, the Commission multiplies the 

number of cancellations in each 

baseline category by the matched percancellation benefit on the low- and the 

high-end and then sums across all four 

categories to obtain total benefits each 

year. Those totals are presented in Table 

5. In the first year following 

implementation of the final Rule, the 

Commission estimates the benefits will 


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586For example, NCTA, FTC–2023–0073–0008, 

indicated some major cable operators estimate it 

could cost $12–$25 million per company and take 

2–3 years to rebuild their systems and one of its 

members thought annual costs could be 15–20% of 

the implementation costs (an industry rule of 

thumb). This comment does not itemize costs across 

different elements of the specific rules adopted. 

Additionally, estimates of the annual costs of 

maintaining systems may be blanket costs that 

include a host of programming maintenance 

features that are unrelated to the specific 

disclosures and ‘‘click to cancel’’ features of the 

final Rule. Moreover, NCTA’s comment indicated 

customers of top cable operators enrolled over the 

phone (43%), online (30%), and in person (24%) 

and calls to customer service are answered within 

30 seconds and lines are available 24 hours a day, 

7 days a week. Accordingly, no extra compliance 

steps may be necessary with respect to offering final 

Rule-compliant cancellations for enrollments made 

by telephone, and compliance with the final Rule’s 

requirement that firms offer an extra cancellation 

mechanism for in-person enrollments likely could 

be met through reliance on these firms’ existing 

telephonic cancellation capabilities. Accordingly, 

the provision of an online cancellation mechanism 

will be required only for the 43% of their 

consumers who presently enroll online, and NCTA 

has not provided estimates of compliance costs that 

are specifically tailored to that segment of their 

consumer base. Because NCTA members who enroll 

consumers online already, clearly, have websites, 

the Commission rejects the notion that adding 

‘‘click to cancel’’ functionality to websites that 

already include an order path for enrolling, and 

likely also include functionality for registering a 

payment mechanism for automated billing, would 

cost $12–$25 million, particularly in light of 

NCTA’s discussion of compliance with the 2019 

Television Viewer Protection Act (‘‘TVPA’’) which, 

NCTA claims, already regulates the very same 

practices the FTC is attempting to regulate here. 

NCTA further claims major cable operators estimate 

that it cost approximately $2.5 to 4 million per 

company and took about one year for TVPA 

compliance. However, having already incurred the 

costs to comply with ‘‘the very same practices’’ the 

final Rule addresses in the course of complying 

with the TVPA, there would appear to be no 

incremental costs to comply with the final Rule. 

Therefore, because the final Rule is narrower in 

scope than as proposed in the NPRM and because 

it offers firms the opportunity to apply to be 

excluded, the Commission rejects NCTA’s claim 

compliance with the Rule would be multiples of 

TVPA compliance costs and require building online 

cancellation systems virtually from the ground up 

and expensive ongoing recordkeeping requirements 

across all services. Accordingly, the Commission 

does not include in the estimates of compliance 

costs the aggregate, non-specific, and possibly 

idiosyncratic compliance costs NCTA cites. 

Similarly, an expert’s survey submitted by IAB 

(attachment B to FTC–2024–0001–0010) found only 

six respondents (out of more than 100,000 

companies subject to the proposed Rule) indicated 

the annual cost of compliance would be a total of 

$50 million, but provided no itemization of these 

costs, such that they cannot be disaggregated to 

comport with the narrower scope of the final Rule. 

587For example, an expert report (Christopher 

Carrigan and Scott Walster, FTC–2024–0001–0026) 

filed by IAB concluded the effects of the proposed 

Rule, if finalized, on the U.S. economy would 

surpass $100 million annually. The Commission 

agrees with this conclusion. The Commission 

disagrees, however, with both the initial and ongoing compliance costs used by Carrigan-Walster; 

both were liberally based on replicating 

assumptions made in the preliminary regulatory 

analysis in the NPRM. Further, their assumptions 

are inappropriate to this cost analysis because they 

fail to account for the fact firms subject to the final 

Rule, unlike firms subject to the proposed Unfair or 

Deceptive Fees Rule, are already required to 

provide clear and conspicuous disclosures of all 

material facts relating to the sale of negative option 

contracts under the totality of ROSCA, the TSR, and 

section 5 of the FTC Act, and to provide simple 

cancellation mechanisms under ROSCA for those 

firms covered by ROSCA. In addition, firms subject 

to the final Rule are also required to comply with 

a variety of other laws relating to negative option 

sales, including the current Prenotification Rule, 

EFTA, the Unordered Merchandise Statute, 

numerous State laws, various laws and regulations 

that effect specific industries, such as the 

Television Viewer Protection Act of 2019 (TVPA), 

other FCC regulations, and, for multi-national 

entities, various foreign laws. Accordingly, the 

units of specialized labor, e.g., lawyer, web 

developer, and business analyst time, that CarriganWalster adopt from the Unfair or Deceptive Fees 

NPRM are not valid representations of the usage of 

such inputs that are incremental to compliance 

range between $661.52 million and 

$5.32 billion. In Year 10, the 

Commission estimates the benefits will 

range between $703.82 million and 

$5.66 billion. Using a 2 percent discount 

rate, the Commission estimates the 

present discounted value of benefits 

over 10 years to range between $6.13 

and $49.32 billion. Annualized over 10 

years using a 2 percent discount rate, 

the Commission estimates the benefits 

to range between $682.83 million and 

$5.49 billion per year. 

TABLE 5—TOTAL QUANTIFIED BENEFITS

[In millions, 2023 dollars] 

Year Low High 

1 ............................................................................................................................................................................... $661.52 $5,318.76 

2 ............................................................................................................................................................................... 666.63 5,359.88 

3 ............................................................................................................................................................................... 671.75 5,401.01 

4 ............................................................................................................................................................................... 676.86 5,442.14 

5 ............................................................................................................................................................................... 681.98 5,483.26 

6 ............................................................................................................................................................................... 687.09 5,524.39 

7 ............................................................................................................................................................................... 691.27 5,558.00 

8 ............................................................................................................................................................................... 695.45 5,591.62 

9 ............................................................................................................................................................................... 699.63 5,625.23 

10 ............................................................................................................................................................................. 703.82 5,658.84 

Present Discounted Value of Benefits over 10 years, 2% discount rate ......................................................... 6,133.57 49,315.39 

Annualized Benefits over 10 years, 2% discount rate ..................................................................................... 682.83 5,490.11 

(c) Estimated Costs of the Final Rule 

This section describes the costs 

associated with firms coming into 

compliance with the final Rule, 

provides quantitative estimates where 

possible, and describes costs that are 

only assessed qualitatively. Whereas 

benefits were estimated based on 

cancellation transactions, compliance 

costs are estimated on the basis of firms 

covered by the final Rule. The 

Commission first examines the 

comment record on compliance costs 

and then estimates the compliance costs 

for the initial year and subsequent nine 

years following implementation of the 

final Rule. 

(1) The Comment Record 

The comment record has not provided 

specific data useful to the estimation of 

the costs of compliance with the 

disclosure, cancellation, and 

recordkeeping requirements of the final 

Rule. 

Some industry commenters addressed 

compliance costs by providing broad, 

aggregate, conclusory cost estimates; 

because those costs were not itemized 

by specific features of the Rule as 

proposed in the NPRM, the Commission 

is unable to use those comments to 

estimate compliance costs relevant to 

the substantially narrowed scope of the 

final Rule in comparison to the Rule 

proposed in the NPRM.586 The same is 

generally true of testimony and expert 

reports submitted in conjunction with 

the informal hearing. Those materials 

did not focus on providing specific, 

relevant, data that would permit 

estimating compliance costs of the final 

Rule.587


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with the final Rule relative to its existing regulatory 

baseline. 588See IFA, FTC–2024–0001–0001. 589 IFA provided an extreme example relevant to 

what it identified as a preventative healthcare 

franchise system without disclosing how many 

individual firms belonged to that system. In the 

context of that system, IFA stated it would take 

thousands of hours to access if modifications are 

necessary to existing contracts, marketing, and 

operational processes and implement any 

requirements, costing hundreds of thousands of 

dollars. IFA did not, however, provide detailed, 

itemized, estimates of compliance costs that relate 

to the specific features of the final Rule, which has 

been substantially streamlined relative to what was 

proposed in the NPRM, making IFA’s highly 

aggregated notion of compliance costs for one 

particular group system’ inapplicable to the current 

cost analysis. The same lack of specificity is present 

in IFA’s discussion of ‘‘Fitness franchise systems.’’ 

With somewhat greater specificity, IFA estimates 

costs to comply with disclosure and recordkeeping 

requirements are 24 hours annually, but IFA did not 

disclose what type of labor inputs are involved in 

those tasks nor the number of fitness facilities that 

will incur these costs. Moreover, IFA reveals its 

members estimate the impact to member lifetime 

value will exceed $100,000 per fitness center and 

lost revenue is expected to be nearly $40,000 

annually per fitness center, but these figures cannot 

properly be considered compliance costs as they 

may, in fact, represent benefits consumers receive 

from speedier exits from fitness club memberships 

that are no longer wanted by consumers. 

590Some of its members may offer yearly 

contracts that do not auto-renew, but that apportion 

payments over 12 months for the convenience of 

consumers. Such contracts are installment plans, 

and not negative option plans. Others may conduct 

business on a pay-as-you-go basis. 

591As explained in the NPRM, this estimate is 

based primarily on data from the U.S. Census North 

American Industry Classification System (NAICS) 

for firms and establishments in industry categories 

wherein some sellers offer free trials, automatic 

renewal, prenotification plans, and continuity 

plans. Based on NAICS information as well as 

Commission staff’s own research and industry 

knowledge, the Commission identified an estimated 

total of 530,000 firms involved in such industries. 

However, the Commission estimates only a fraction 

of the total firms in these industry categories offer 

negative option features to consumers. For example, 

few grocery stores and clothing retailers, which 

account for approximately a third of the of the total 

estimate from all industry categories, are likely to 

regularly offer negative option features. In addition, 

some entities included in the total may be exempt 

from the Commission’s authority. Accordingly, the 

Commission estimates approximately 106,000 

business entities (20%) offer negative option 

features to consumers. See 88 FR 24733. Although 

no commenter proposed a different number, ETA, 

FTC–2023–0033–1004, challenged the 

Commission’s estimated number of firms selling 

negative option plans on the basis that it did not 

account for ‘‘the many providers of goods and 

services to business where automatic renewal 

clauses are used.’’ 

592See U.K. ‘‘Impact Assessment’’ (2023) at 26. 

While the U.K.’s rule may not be directly analogous 

to the final Rule, it addresses similar problems 

associated with consent and cancellation associated 

with negative option practices. Therefore, the 

burden the U.K.’s rule places upon subscription 

sellers, in terms of executive and staff resources to 

read and understand the rule and assess whether 

existing procedures are in compliance or need to be 

revised, may be highly similar to the familiarization 

steps that U.S. businesses will need to undertake. 

593The mean hourly wage for lawyers in 2023 

was $84.84; see Bureau of Labor Statistics, 

‘‘Occupational Employment and Wages, May 2023, 

23–1011 Lawyers,’’ https://www.bls.gov/oes/ 

current/oes231011.htm. 

594The Commission uses a mean hourly wage for 

sales personnel of $25.62; see Bureau of Labor 

Statistics, ‘‘Occupational Employment and Wages, 

May 2023, 41–0000 Sales and Related Occupations 

(Major Group),’’ https://www.bls.gov/oes/currenT/ 

oes410000.htm. The Commission uses a mean 

hourly wage for clerical workers of $20.94, see 

Bureau of Labor Statistics, ‘‘Occupational 

Employment and Wages, May 2023, 43–9061 Office 

Clerks, General,’’ https://www.bls.gov/oes/currenT/ 

oes439061.htm. The average of these two mean 

wage rates is $23.27. 

Another commenter addressed the 

Paperwork Reduction Act cost estimate 

in the NPRM in a way that conflated it 

with the totality of compliance costs. 

IFA, which represents firms, including 

small firms, in the fitness, preventative 

healthcare, personal wellness or 

children’s extracurricular activities 

industries, commented, ‘‘the FTC’s 

estimate (in the NPRM) that it will cost 

companies merely three hours annually 

at $22.15/hr to comply is grossly 

understated for IFA’s members.’’ 588 The 

Commission agrees the final Rule’s 

compliance costs will exceed the 

Paperwork Reduction Act costs 

discussed in the NPRM because the 

Paperwork Reduction Act costs only 

include burden associated with 

information collection requirements, 

such as recordkeeping and disclosure 

costs, while the total compliance costs 

include those costs as well as costs of 

familiarization with the Rule and costs 

to bring cancellation mechanisms into 

compliance. IFA did not, however, 

provide a sufficiently detailed 

alternative estimate of annual or 

ongoing general compliance or 

recordkeeping costs for its members.589

Similarly, IFA provided no information 

on the enrollment mechanisms used by 

its members nor an estimate of what 

share of its members offer negative 

option plans.590

IFA did, however, comment that 

many of its members already offer 

consumers the ability to pause or 

‘‘freeze’’ memberships, noting, 

‘‘consumers take advantage of 

alternatives to membership cancellation 

at rates of 10% to 40%, with many 

consumers electing to reactivate their 

memberships, saving thousands of 

dollars annually in increased 

membership rates and additional 

initiation fees.’’ While pause/freeze 

capabilities are indeed beneficial to 

consumers, they do not relieve a firm 

from an obligation to offer a cancellation 

mechanism. IFA did not provide similar 

data on what percentage of its member 

firms’ consumers are dissatisfied with 

pause/freeze opportunities and seek 

authentic cancellations or what 

cancellation mechanisms its member 

firms make available to consumers. 

The technological capability to pause 

or freeze subscriptions suggests the 

presence of software architecture 

‘‘scaffolding’’ upon which a cancellation 

mechanism could be built at a modest 

incremental cost. Alternatively, the 

offering of subscription pauses or 

freezes by some IFA members may 

suggest those members use the services 

of third-party e-commerce hosting 

platforms or payment processors who 

routinely provide consumer 

subscription account management tools 

relied on by businesses, including small 

businesses. As discussed, below, 

existing software scaffolding and the 

utilization of third-party consumer 

subscription management tools can 

facilitate low- (and even no-) cost 

compliance with some of the final 

Rule’s requirements. 

(2) Initial Compliance Costs 

The Commission has previously 

estimated that 106,000 firms offer 

negative option plans.591 The 

Commission assumes that to come into 

compliance with the final Rule, all 

106,000 firms selling negative option 

plans will need to expend some 

resources to familiarize themselves with 

the final Rule and some firms will incur 

costs related to improvements in their 

pre-consent disclosures and 

cancellation mechanisms. 

Familiarization costs: No commenters 

presented estimates expressly related to 

the costs of legal and managerial review 

of the final Rule and front-line staff 

training needed to come into 

compliance. The U.K. ‘‘Impact 

Assessment,’’ using surveys and 

interviews with managers of firms that 

sold goods and services via negative 

options, found that firms would need 

between four and 16 hours of ‘‘senior 

staff’’ time, depending upon the size of 

the firm, to gain familiarization with 

their proposed rule, and between zero 

and 80 hours of ‘‘service staff’’ time, 

again depending upon the size of the 

firm.592 The Commission assumes that 

similarities between American and 

British firms are such that the same 

units of time are relevant for American 

firms to gain familiarity with the final 

Rule. In the American context, the 

Commission assumes ‘‘senior staff time’’ 

is proxied by ‘‘attorney time,’’ and uses 

the mean hourly wage for attorneys, 

$84.84 per hour, to estimate those 

costs.593 Similarly, the Commission 

assumes ‘‘service staff time’’ is proxied 

by the average of mean wages for 

salespersons and clerical workers, 

which is $23.27.594 Accordingly, the 


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595The final Rule requires disclosure of: the fact 

consumers will be charged; the amount(s) they will 

be charged; when the consumer must act (by 

deadline or frequency) to prevent or stop charges; 

and the information needed for the consumer to 

find the simple cancellation mechanism. 

596See Bureau of Labor Statistics, ‘‘Occupational 

Employment and Wages, May 2023, 15–1254 Web 

Developers,’’ https://www.bls.gov/oes/2023/may/ 

oes151254.htm. 

597This is consistent with the approach taken in 

the expert report submitted by IAB. See CarriganWalster, FTC–2024–0001–0026 (noting many firms 

using negative option marketing present offers 

through the internet and, for firms presenting offers 

through other means, web developer time is used 

as a proxy for worker time to create the presentation 

of the offers). 

598The assumed range of one to 10 hours is 

consistent with the time estimate used for 

compliance checks and minor modifications of 

websites in the Unfair or Deceptive Fees NPRM. See 

88 FR 77420 (Nov. 9, 2023). 

599Trade association commenters who addressed 

cancellation mechanisms used by their members, 

and whether those mechanisms were or were not 

symmetric with enrollment mechanism or as easy 

to use as enrollment mechanisms did so only in a 

very general manner. For example, NCTA (FTC– 

2024–0001–0011) commented that, in 2021 and 

2022, customers of top cable operators enrolled over 

the phone (43%), online (30%), and in person 

(24%)’’ but provided no information on available 

cancellation mechanisms. Additionally, NCTA 

stated its analysis shows complaints received about 

cancellation are very limited (approximately 

0.017% of cancellations) out of the approximately 

14 million customers who cancelled some or all of 

their services from NCTA’s largest cable operator 

members in 2022. Anecdotes such as these, about 

‘‘top’’ or ‘‘largest’’ companies do not provide 

sufficiently reliable data for the instant analysis. 

Similarly, IHRSA’s comment about ‘‘many’’ fitness 

club operations allowing options to cancel by 

simple online solutions is not specific enough to be 

helpful (see FTC–2023–0033–0863). 

600See Sinders (2023). 

601The Commission located subscriber estimates 

for seven (Amazon, Ancestry, Hulu, Netflix, 

Paramount+, The Boston Globe, and The New York 

Times) of the 16 firms included in the research. The 

number of U.S. subscribers to Amazon Prime is 

estimated to reach 171.8 million in 2024. See 

https://www.yaguara.co/amazon-prime-statistics. 

At year-end 2023, Ancestry.com had over 3 million 

subscribers. See https://www.ancestry.com/ 

corporate/newsroom/press-releases/ancestryreleases-2023-annual-impact-report--underscoringcorpor. As of the second quarter of 2024, Hulu had 

50.2 million paid U.S. subscribers. See https://

www.statista.com/statistics/258014/number-ofhulus-paying-subscribers). Also as of the second 

quarter of 2024, Netflix had 84.11 million 

subscribers in the U.S. and Canada. See https://

www.statista.com/statistics/483112/netflixsubscribers. Even if the Commission makes the 

extreme assumption that every Canadian held a 

Netflix subscription, that would still leave 

approximately 50 million U.S. subscribers. 

Paramount+ had over 71 million subscribers as of 

the first quarter of 2024. See https://

www.theverge.com/2024/4/29/24144766/ 

paramount-plus-now-has-over-71-millionsubscribers). The Boston Globe had 260,000 (mostly 

digital) subscribers in 2023. See https://

pressgazette.co.uk/north-america/us-local-newsCommission estimates the aggregate 

initial year familiarization costs as 

ranging between $35.97 million and 

$341.22 million. 

Disclosures: Clear and conspicuous 

disclosures are already required by the 

existing regulatory baseline; 

§ 425.4(a)(1)–(4) of the final Rule adds 

specificity to those disclosures, albeit in 

a flexible way.595 As estimated below, 

the Commission assumes some 

marketers are already in compliance 

with the disclosure requirements of the 

final Rule; for these marketers, there are 

no incremental costs of compliance with 

the disclosure requirements of the final 

Rule. 

For online marketers, the current 

regulatory baseline is ROSCA, which 

requires marketers to clearly and 

conspicuously disclose all material 

terms of the transaction before obtaining 

the consumer’s billing information. To 

the extent ROSCA-covered marketers’ 

current disclosures lack the specificity 

required by the final Rule, the 

Commission estimates changes will be 

needed only to textual elements of such 

marketers’ websites and that no changes 

to the underlying website architecture 

will be needed. The Commission further 

assumes any such changes, if needed, 

will be made by website developers, 

whose mean hourly wage is $45.95.596

Similarly, some telemarketers and inperson negative option marketers may 

need to modify their sales agents’ scripts 

to incorporate the disclosures required 

by the final Rule. Without loss of 

generality, the Commission assumes the 

mean wage rates of marketers’ staff who 

will make such script changes is 

proxied by the mean wage rates of web 

developers.597 Although in the 

Commission’s experience these changes 

should take very little time, perhaps as 

little as one hour, the Commission 

adopts a range of one to 10 hours to 

complete this task.598

Accordingly, the Commission 

estimates that for those marketers whose 

disclosures are not already in 

compliance with the requirements of the 

final Rule, disclosure compliance costs 

will range between $45.95 and $459.50. 

Cancellation mechanisms: Section 

425.6 of the final Rule requires negative 

option marketers to provide a simple 

cancellation mechanism that is in the 

same medium, and at least as simple for 

the consumer to use, as the mechanism 

by which the consumer provided 

consent to the negative option plan. 

Additional requirements are mediumspecific. For example, when consent is 

provided through an interactive 

electronic medium, the cancellation 

mechanism (also provided through an 

interactive electronic medium) must be 

easy for the consumer to find when the 

consumer seeks cancellation 

information (for example, on a website, 

the cancellation mechanism cannot be 

hidden in ‘‘terms and conditions’’ or 

otherwise difficult to find) and cannot 

require interactions with live or virtual 

representatives (such as chatbots) if no 

such interactions were required when 

the consumer consented. 

When consent is provided over the 

telephone, the final Rule requires that 

telephonic cancellation must be 

available during normal business hours 

and not be more costly for the consumer 

to use than the telephone call the 

consumer used to consent to the 

negative option feature. 

When consumer consent to a negative 

option plan is provided via an in-person 

method, the marketer must offer 

cancellation opportunities, where 

practical, in a like manner. In addition, 

the marketer must offer an alternative 

simple cancellation mechanism through 

an interactive electronic medium or by 

providing a telephone number that 

satisfies all final Rule requirements 

related to use of those cancellation 

media. 

The costs negative option sellers will 

incur in the initial year following 

implementation of the final Rule to 

bring their cancellation mechanisms 

into compliance with the final Rule will 

depend upon their pre-existing 

cancellation mechanisms. No 

commenter provided research or data on 

the frequency of use of different 

cancellation mechanisms across 

negative option marketers or on the 

incremental costs to make the existing 

cancellation mechanism compliant with 

the requirements of the final Rule.599

Because the comment record has not 

provided sufficient data to estimate the 

costs of compliance with the final Rule’s 

cancellation requirements, the 

Commission turns to data from the 

U.K.’s ‘‘Impact Assessment’’ on 

regulating subscriptions there. Based on 

these sources, the Commission finds 

some sellers of negative option plans are 

already in compliance with the 

cancellation requirements of the final 

Rule, and many others will incur only 

minimal costs to make their cancellation 

flows compliant with the final Rule. 

The relevant experimental research 

looked at the cancellation practices of 

16 online subscription sellers, many of 

them large and well-known firms, and 

noted the cancellation mechanisms 

made available to consumers and how 

easy those mechanisms were for 

consumers to locate and use.600

Although the number of firms sampled 

in this research was small, publicly 

available data on total enrollments, 

located for just seven of the 16 firms, 

collectively numbered over 350 

million,601 which may lend significance 


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subscribers-ranking. As of mid-year 2024, the New 

York Times had 10.8 million subscribers. See 

https://www.nytimes.com/2024/08/07/business/ 

media/new-york-times-earnings.html. The 

Commission was unable to locate subscriber data 

for some of the other firms sampled (e.g., Savage 

Fenty, Daily Harvest, Deliveroo) and in some other 

instances found subscriber data reported only on a 

global basis (e.g., Google One, Adobe). 

602 In the researcher’s view, this kind of naming 

is confusing and adds unnecessary friction to the 

cancellation process. See Sinders (2023). 603U.K. ‘‘Impact Assessment’’ (2023) at 26. 

604U.K. ‘‘Impact Assessment’’ (2023) at 27 (citing 

a report from 2022). 

605See Bureau of Labor Statistics, ‘‘CPI Inflation 

Calculator,’’ https://www.bls.gov/data/inflation_

calculator.htm. We note that this amount is equal 

to 10.25 hours of computer programmer time valued 

at a mean hourly wage rate of $51.90; see Bureau 

of Labor Statistics, ‘‘Occupational Employment and 

Wages, May 2023, 15–1251 Computer 

Programmers,’’ https://www.bls.gov/oes/current/ 

oes151251.htm. As such, this is consistent with the 

outcome of the approach used by Carrigan-Walster, 

FTC–2024–0001–0026, in proxying the first-year 

costs of compliance costs with each of the six 

provisions of the Rule proposed in the NPRM 

(which differed, substantially, from the narrowed 

final Rule, although not with respect to ‘‘click to 

cancel’’ provisions). That approach made the ad hoc 

assumption that technological changes required by 

the Rule would require the same labor inputs as 

similar requirements in the NPRM for the FTC’s 

Rule on Unfair or Deceptive Fees, notwithstanding 

the two rules differ substantially in their regulatory 

baselines. See 88 FR 77420. 

606To the extent that a marketer uses the easy 

subscription account management and cancellation 

tools offered by hosting platforms or payment 

processors and the presence of such tools reduces 

consumers’ perception of the risks of entering into 

a subscription agreement with the marketer, the 

marketer’s sales may increase along with any 

payments to the platform or processor that are 

based on the number of transactions or aggregate 

sales. 

607See, for example, Shopify’s help page at 

https://help.shopify.com/en/manual/products/ 

purchase-options/shopify-subscriptions/customerexperience#subscription-management-forcustomers, ‘‘Shopify Subscriptions displays 

subscription information to customers in the 

checkout. For example, when buying a subscription 

product, the order frequency and discount amount 

for the subscription is displayed in the order 

summary . . . . During checkout, your customer 

needs to agree to the cancellation policy terms to 

confirm that they understand they’re purchasing a 

subscription. They can’t complete their purchase 

without agreeing to this policy . . . . Customers 

can log in to their customer account to view and 

manage their subscription orders. Customers can 

resume, skip, and cancel their subscriptions, and 

manage their payment methods and shipping 

address.’’ Moreover, Shopify offers a variety of 

consumer subscription management tools to 

merchants that use Shopify for payment processing 

(‘‘checkout’’) or website hosting at no incremental 

cost to merchants See https://apps.shopify.com/ 

categories/selling-products-purchase-optionssubscriptions. The fees Shopify charges merchants 

varies with a number of merchant-specific features, 

including website design elements, whether 

merchants want ‘‘Shopify checkout’’ to work on 

Continued 

to this research beyond what might 

otherwise be associated with a sample 

size of 16 firms. Moreover, the 

methodology of the study suggests that 

the researcher’s experiences with 

enrollment and cancellation likely 

would be typical of any consumer 

undertaking the same enrollment and 

cancellation tasks with those firms. 

The experimental research found that 

18.75% (i.e., 100 × 3/16) of the online 

marketers studied offered online 

cancellations in a straightforward, easy 

to use manner such that it took the 

researcher less than one minute to 

complete a subscription cancellation. 

The Commission therefore assumes that 

18.75% of online sellers of negative 

option plans will not need to change 

their websites to come into compliance 

with the cancellation requirements of 

the final Rule. Although this research 

did not specifically measure the 

adequacy of pre-consent disclosures, the 

Commission assumes that companies 

who make cancellation so easy for 

consumers perform equally well in 

making disclosures. Accordingly, the 

Commission assumes that the 18.75% of 

online firms selling negative options 

that will not incur incremental costs to 

comply with the final Rule’s 

cancellation requirements also will not 

incur any incremental costs to comply 

with the final Rule’s disclosure 

requirements. The Commission assumes 

that the remaining 81.25% of online 

negative option sellers that lacked such 

easy-to-use cancellation mechanisms 

also performed less well in making the 

disclosures required by the final Rule, 

such that they would incur initial year 

compliance costs of improving their 

disclosures as indicated by the range 

estimated above. 

The same research found that 62.5% 

(i.e., 100 × 10/16) of sampled online 

negative option sellers had cancellation 

paths that took longer for consumers to 

complete as a result of nomenclature, 

not website architecture. These sites, 

rather than using straightforward terms 

such as ‘‘unsubscribe’’ or ‘‘cancel,’’ put 

the cancellation path under titles such 

as ‘‘auto-renew’’ or ‘‘edit plan,’’ 602 and 

locating the cancellation mechanism 

delayed the researcher in completing 

the cancellation task because of the nonintuitive labeling of the entry point into 

the cancellation mechanism. In such 

instances, more intuitive, consumerfriendly labeling of the existing 

cancellation architecture is assumed to 

be what is needed for these sites to 

come into compliance with the 

cancellation requirements of the final 

Rule. The Commission assumes such 

relabeling will not require any 

additional programming or changes to 

the underlying website architecture. In 

the Commission’s experience, such 

‘‘cosmetic’’ changes can be made 

quickly and inexpensively, possibly in 

as little as one hour of a website 

developer’s time. The Commission 

notes, however, that the U.K. ‘‘Impact 

Assessment,’’ in considering ‘‘general 

updates to websites such as reflecting 

the clearer communication on contract 

conditions and updating cancellation 

options,’’ estimated that such changes 

would ‘‘require eight hours’ work from 

an IT professional and that these costs 

are uncorrelated with the size of the 

business.’’ 603 The website changes 

contemplated in that assessment likely 

exceed those required to merely relabel 

consumer-facing elements of an existing 

cancellation architecture. Out of an 

abundance of caution, however, the 

Commission uses the U.K.’s estimate of 

eight hours as an upper bound on the 

time required to make the needed 

changes and further assumes that the 

relevant ‘‘IT professionals’’ are website 

developers, which, as noted previously, 

have a mean wage rate of $45.95. 

Accordingly, the Commission assumes 

each firm that needs to relabel existing 

cancellation mechanisms to make those 

mechanisms easy for consumers to 

locate and use will spend between 

$45.95 (i.e., 1 × $45.95) and $367.60 

(i.e., 8 × $45.95) to come into 

compliance with the final Rule’s 

cancellation requirements. 

Lastly, the aforementioned research 

found that 18.75% (i.e., 100 × 3/16) of 

online negative option sellers offered 

only telephonic cancellation. Such 

firms, because they were online sellers, 

clearly had online ordering and 

payment website architecture in place, 

and so had ‘‘scaffolding’’ upon which 

online cancellation architecture could 

be built. No commenter provided 

relevant data on the costs of buildingout a ‘‘click-to-cancel’’ mechanism in 

such instances, and the U.K ‘‘Impact 

Assessment’’ indicated it ‘‘lacked high 

quality evidence on the costs businesses 

would incur’’ to integrate ‘‘easy exiting 

mechanisms into websites.’’ As a result, 

the ‘‘Impact Assessment’’ turned to 

‘‘external estimates’’ from ‘‘[t]he U.S. 

eCommerce agency OuterBox [which] 

indicates a possible range of costs. It 

suggests that integrating simple tools 

into an existing eCommerce platform 

would cost most businesses 

approximately $500’’ in 2022.604 In 

2023 dollars, that amount is $532.05.605

The Commission notes, however, that 

many payment processors and website 

hosting platforms used by many 

businesses, particularly small and 

medium-sized businesses, provide 

marketers with consumer subscription 

account management tools that provide 

consumers with ‘‘click-to-cancel’’ 

functionality at no direct 606 incremental 

cost to marketers.607 As no commenter 


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90530 Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 

social media platforms in addition to the 

merchant’s own website, how many of the 

merchant’s employees will have the ability to login to the merchant’s Shopify account, etc. (see 

https://aureatelabs.com/blog/shopify-websitedevelopment-cost). So, although what merchants 

pay to use Shopify may vary across firms, the 

incremental cost of using Shopify for consumer 

subscription account management is assumed to be 

zero. See also Hoofnagle, FTC–2023–0033–1137 

(‘‘There are scores of companies like Chargebee that 

help companies manage subscriptions . . . . 

Compliance with new rules is inexpensive because 

policy changes can be made programmatically in 

dashboards’’ provided by entities such as 

Chargebee.’’). 

608No commenter to the ANPR or NPRM, and no 

comment, expert report, or testimony in relation to 

the informal hearing provided estimates of 

compliance costs firms would incur that were 

specific to the features of the Rule as then-proposed 

that remain in the final Rule. 

609See NPRM, 88 FR 24733. 

610Because telemarketing firms are such a small 

share of all firms that will be covered by the final 

Rule, the Commission does not expect this 

treatment of telemarketers (or, indeed, even a total 

exclusion of telemarketers from the analysis) to 

impart a significant bias. 

611Three trade associations, who have some 

members who either sell or offer cancellation 

mechanisms in-person, submitted comments that 

were not sufficiently detailed to permit Commission 

staff to estimate the number of firms that both sell 

and cancel in-person or through the mail. For 

example, IHRSA (FTC–2023–0033–0863) 

commented many of its members allow several 

options for agreement termination through simple 

online solutions including online account 

management, email cancellation requests, and 

specific online cancellation buttons or forms, 

adding many of these options are currently 

available for members who have purchased their 

membership either online or in person. The 

International Carwash Association (‘‘ICA’’), FTC– 

2023–0033–1142, commented on subscriptionrelated revenues of member firms (noting more than 

half, and sometimes more than 80%, of store 

revenues can be attributable to subscription sales), 

but not on the number of firms that sell 

subscriptions or how many subscriptions they sell. 

Similarly, although it commented subscriptions 

could be purchased in person, on the world wide 

web, via a mobile app, or at an automated teller, 

it provided no data on the relative shares of 

subscription purchases through these channels or 

the cancellation mechanisms made available to 

consumers. The objections ICA raised to a Rule 

requiring its members to offer cancellation by any 

method other than in-person strongly suggests that 

most member firms currently only offer cancellation 

that way, suggesting that those who sell on the 

internet, via a mobile app and (possibly) at an 

automated teller may already be in violation of 

ROSCA if in-person cancellations are a violation of 

ROSCA’s ‘‘simple cancellation mechanism’’ 

requirement. IFA (FTC–2023–0033–0856) provided 

data from its database on the number of franchisees 

operating fitness establishments, spa/massage 

studios, entertainment facilities, and preventative 

healthcare facilities in the U.S., but provided no 

information on what share of firms sold 

subscriptions or the media through which consent 

was obtained or cancellation mechanisms were 

offered. In a later comment (FTC–2024–0001–0009), 

IFA noted consumers of member firms used the 

alternative of ‘‘freezing’’ their memberships at rates 

of 10%–40% but did not provide information on 

what the ‘‘freezing’’ mechanism was or what 

cancellation mechanisms were available to 

consumers. 

612See Carrigan-Walster, FTC–2024–0001–0026 

(employing a similar assumption: ‘‘Many firms 

using negative option marketing present their offers 

through the web. For those firms that present offers 

through other means, web developer time is used 

as a proxy for worker time to create the presentation 

of the offers.’’). 

provided information on (1) how many 

negative option sellers comply with 

ROSCA by offering only telephonic 

cancellation, (2) what specific costs they 

would face to provide an online 

cancellation mechanism, or (3) whether 

they would build such functionality 

themselves or use a third-party payment 

processor or hosting platform to provide 

it for them, we estimate such costs to 

range between $0 and $532.05 per firm. 

Accordingly, the Commission 

assumes that most online marketers of 

negative option plans will face minimal 

IT costs of coming into compliance with 

the cancellation requirements of the 

final Rule.608

As noted previously, telemarketers 

have substantial control over both how 

long the consent process takes and how 

long it takes a consumer to complete a 

cancellation over the telephone. If 

compliance with the final Rule 

expedites the cancellation process over 

the phone, telemarketers may 

experience cost-savings associated with 

such resources. Furthermore, no 

telemarketers or call centers that 

provide services to telemarketers 

submitted comments relating to what 

costs telemarketers would incur to bring 

cancellation mechanisms into 

compliance with the final Rule. Because 

of this, and because the Commission has 

previously found that only 2,000 609 of 

106,000 firms selling negative options 

were telemarketers (and no commenter 

has disputed this finding), the 

Commission proceeds as if 

telemarketers face no incremental costs 

in complying with the final Rule’s 

cancellation requirements. However, to 

reduce any potential downward bias 610

this might introduce into the 

compliance cost estimate, the 

Commission does not subtract the 

estimated number of telemarketers 

(2,000) from the total estimated number 

of online negative option marketers in 

its calculations of costs. Similarly, the 

Commission lacks data on how many of 

the 106,000 firms selling negative 

option plans currently offer only inperson or by-mail cancellations.611 The 

final Rule requires such firms to add a 

cancellation mechanism that consumers 

can easily use in a remote manner, e.g., 

through interactive electronic media or 

by telephone. 

Lastly, the Commission considers the 

initial year recordkeeping costs required 

by the Rule, which are estimated in 

section XIII to be $6.54 million when 

aggregated across all 106,000 firms. 

Because of the aforementioned data 

limitations emerging from the comment 

record, the Commission applies the 

findings of the experimental research 

above, which looked only at online 

sellers, to the full number of firms, 

106,000, that it has previously estimated 

to be marketers of negative option plans. 

This approach comports with a general 

proposition made by the report 

submitted by IAB.612

Accordingly, the Commission makes 

the following estimates of initial year 

compliance costs. 

Familiarization costs: All 106,000 

firms selling negative options will 

collectively incur final Rule 

familiarization costs of between $35.97 

million and $341.22 million. 

Disclosure costs: 19,875 firms (i.e., 

.1875 × 106,000) will incur no costs in 

bringing their disclosures into 

compliance with the requirements of the 

final Rule because their disclosures are 

already compliant. The remaining 

86,125 firms will collectively incur 

costs of between $3.96 million (i.e., 

$45.95 × 86,125) and $39.58 million 

(i.e., $459.50 × 86,125) to make their 

disclosures compliant with the final 

Rule. 

Cancellation costs: 19,875 firms (i.e., 

.1875 × 106,000) will incur no costs in 

bringing their cancellation mechanisms 

into compliance with the final Rule. 

66,250 firms (i.e., .625 × 106,000) 

collectively will incur costs of between 

$3.04 million (i.e., 1 × $45.95 × 66,250) 

and $24.35 million (i.e., 8 × $45.95 × 

66,250) to bring their online 

cancellation mechanisms into 

compliance with the final Rule by 

relabeling consumer-facing elements of 

their existing cancellation architecture. 

19,875 firms (i.e., .1875 × 106,000) 

collectively will incur costs of between 

$0 and $10.57 million (i.e., 19,875 × 

$532.05) to bring their telephonic 

cancellation mechanisms into 

compliance with the final Rule. 

The Commission notes that this 

analysis does not quantify costs for the 

firms selling negative option plans that 

offer only in-person or by-mail 

cancellation. The Commission assumes 

that, in complying with this final Rule, 

these firms will choose to provide the 

alternative cancellation method (by 

phone, online, or both) that makes the 

most economic sense. The Commission 

also assumes that the cost of processing 

a cancellation over the phone should be 

similar to or less than the cost of 

processing a cancellation in person or 

by-mail for these firms. Therefore, the 

Commission assumes that these firms 

will not incur significant compliance 


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613U.K. ‘‘Impact Assessment’’ (2023) at 30. 

614 ‘‘We note for example, that Ofcom assessed 

. . . the business costs of providing customers with 

notifications at the end of their contracts. These 

involved possible ongoing costs related to 

identifying customers that needed notifications on 

an ongoing basis and providing them with the 

notification. After consultation with stakeholders, 

Ofcom only estimated the costs of providing 

consumers with letters, on the basis that only this 

medium had significant ongoing costs.’’ Id. 

615See discussion in section VII.B.1.a.2 of this 

SBP and n.146. 

costs to provide an alternative 

cancellation method. 

Recordkeeping costs: Collectively, 

firms will incur recordkeeping costs of 

$6.54 million annually. 

Total Initial Year Costs: Summing 

costs enumerated above, the 

Commission estimates the costs of the 

Rule in the first year will range between 

$49.52 and $422.26 million. These costs 

are presented in Table 6. The 

Commission assumes that these costs 

will be incurred by the end of the initial 

year following the Rule’s 

implementation. 

TABLE 6—TOTAL INITIAL YEAR COMPLIANCE COSTS

[In millions, 2023 dollars] 

Low High 

Familiarization Costs ............................................................................................................................................... $35.97 $341.22 

Disclosure Costs ...................................................................................................................................................... 3.96 39.57 

Cancellation Mechanisms Costs ............................................................................................................................. 3.04 34.93 

Recordkeeping Costs .............................................................................................................................................. 6.54 6.54 

Total Initial Year Costs ..................................................................................................................................... 49.52 422.26 

(3) Ongoing Compliance Costs, Years 2 

Through 10 

Compliant disclosures, cancellation 

paths, and consumer-facing information 

about cancellation mechanisms will 

form a ‘‘template’’ that can be used 

without any incremental compliance 

costs as new subscription products are 

added to a marketer’s retinue of 

products offered for sale via a negative 

option plan. The information relevant to 

the sale of a new product may be 

‘‘dropped’’ into the template in a fill-inthe-blank way. The Commission 

assumes marketers, in the ordinary 

course of business, know what is 

required for the disclosures (e.g., the 

amounts consumers will be charged, 

when, by date or frequency, such 

charges will occur, when consumers 

must act to stop recurring charges, etc.) 

and consider the costs of entering this 

information into established disclosure 

templates to be a routine cost of doing 

business, not an incremental cost 

required by compliance with the final 

Rule. The same will also be true for 

negative option plans that are 

telemarketed or sold in person; once a 

telemarketing script or an in-person 

sales disclosure form is developed in 

the initial year of compliance, it 

becomes a template that readily can be 

used as new subscription products are 

offered over time. Accordingly, once a 

marketer comes into compliance with 

the final Rule there should be no 

incremental costs of ongoing 

compliance with respect to disclosures 

and cancellation mechanisms, and the 

costs of adding, changing, or deleting 

products the marketer offers for sale via 

negative option will be no different from 

what they would have been absent the 

final Rule. 

The Commission can seek redress or 

civil penalties for violations of the final 

Rule. Absent the final Rule, enforcement 

actions against unfair or deceptive 

negative option practices would be 

brought under section 5 where civil 

penalties are not available and where, 

post-AMG, it is difficult to obtain 

redress. Accordingly, some negative 

option marketers may pay closer 

attention to underlying claims made for 

products marketed using negative 

option sales because of the monetary 

relief available for violations of the final 

Rule relative to a section 5 enforcement 

action. This, however, is no different 

than what any firm should do to assure 

that it is not in violation of section 5, 

and the Commission considers the costs 

of attentiveness to section 5 compliance 

as part of the existing regulatory 

baseline, not as costs that are 

incremental to complying with the final 

Rule. 

The U.K.’s ‘‘Impact Assessment’’ of its 

regulatory treatment of subscription 

plans did not estimate ongoing 

compliance costs because ‘‘the size of 

these costs . . . are likely small in 

comparison to the one-off cost and 

benefits.’’ 613 In further support of this, 

the ‘‘Impact Assessment’’ cited a report 

that found that on-going costs were 

meaningful only in relation to sending 

reminders to consumers about their 

subscriptions, and only for firms that 

used postal mail delivery and not 

electronically delivered reminders.614

The final Rule does not contain a 

‘‘reminder’’ requirement, and so the 

ongoing costs of sending reminders to 

consumers, small though they may be, 

are not ongoing costs of compliance 

with the final Rule. 

The experts’ report submitted by IAB 

estimated 10 hours of attorney time for 

annual compliance checks for the Rule 

proposed in the NPRM. Because the 

final Rule has removed the most 

complex (and, therefore, costly) features 

of the proposed Rule (e.g., double 

consent, the treatment of ‘‘saves’’ in 

cancellation flows, and the issuance of 

annual ‘‘reminders’’ for some 

subscriptions), the Commission assumes 

half of the annual compliance check 

hours assumed in IAB’s experts’ report, 

five hours, is an upper bound on 

attorney hours needed for annual 

compliance checks. Moreover, the 

Commission assumes that some firms 

will incur no incremental annual 

compliance check costs, either because 

their pre-existing business practices 

followed what the final Rule requires or 

because the platforms or payment 

processors they use provide compliant 

disclosures and cancellation flows.615

Accordingly, the Commission 

estimates the aggregate annual costs of 

compliance checks to range between $0 

and $44.97 million (i.e., 106,000 × 5 

hours × $84.84/hour). Inclusive of 

recordkeeping costs, total ongoing costs 

range between $6.54 million (i.e., $0 + 

$6.54 million) and $51.51 million (i.e., 

$44.97 million + $6.54 million). 

(4) Summary of Total Costs 

Table 7 presents the initial and 

recurring costs of this Rule in each year, 

as well as the present discounted value 

and annualized costs over 10 years 

using a 2 percent discount rate. The 

Commission estimates that in Year 1, 

the initial costs will range between 

$49.52 and $422.26 million. In each of 

the following years, the Commission 

estimates that the recurring costs will 

range between $6.54 and $51.51 million. 

The Commission estimates that the 


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90532 Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 

616See NPRM, 88 FR 24733. 

617The Commission acknowledges this excludes 

subscriptions that are enrolled by mail, likely 

resulting in an overestimate of the number of 

subscriptions enrolled online. 

618See Sinders (2023). Among the obstacles noted 

for otherwise seemingly simple online cancellations 

were that some websites did not use straight 

forward terms, such as ‘‘unsubscribe’’ or ‘‘cancel,’’ 

and instead put the cancellation path under titles 

such as ‘‘auto-renew’’ or ‘‘edit plan.’’ 

present discounted value of costs over 

ten years, using a 2 percent discount 

rate, will range between $100.89 and 

$826.15 million. The Commission 

estimates that these costs, annualized 

over ten years using a 2 percent 

discount rate, would range between 

$11.23 and $91.97 million per year. 

TABLE 7—TOTAL QUANTIFIED COSTS

[In millions, 2023 dollars] 

Year Low High 

1 ............................................................................................................................................................................... $49.52 $422.26 

2 ............................................................................................................................................................................... 6.54 51.51 

3 ............................................................................................................................................................................... 6.54 51.51 

4 ............................................................................................................................................................................... 6.54 51.51 

5 ............................................................................................................................................................................... 6.54 51.51 

6 ............................................................................................................................................................................... 6.54 51.51 

7 ............................................................................................................................................................................... 6.54 51.51 

8 ............................................................................................................................................................................... 6.54 51.51 

9 ............................................................................................................................................................................... 6.54 51.51 

10 ............................................................................................................................................................................. 6.54 51.51 

Present Discounted Value of Costs over 10 years, 2% discount rate ............................................................ 100.89 826.15 

Annualized Costs over 10 years, 2% discount rate ......................................................................................... 11.23 91.97 

(d) Sensitivity Analysis 

As a sensitivity analysis, the 

Commission considers an alternative 

method that does not rely on data from 

historical enforcement matters for 

distributing subscription cancellations 

across the baseline cancellation 

methods used to estimate quantified 

benefits. This alternative method 

assumes the majority of subscriptions 

are enrolled online and can be cancelled 

online in the baseline; whereas, in the 

main analysis, the majority of 

subscriptions are enrolled online and 

can only be cancelled by phone in the 

baseline. Compared with the main 

analysis, this alternative method 

produces lower total quantified benefits 

by $419.77 to $449.53 million 

annualized per year, yet the estimated 

range of quantified benefits still exceeds 

the estimated range of quantified costs. 

(1) Number of Cancellations by 

Enrollment and Baseline Cancellation 

Method 

Under this sensitivity analysis, the 

Commission assumes that the baseline 

number of subscriptions and 

cancellations is the same as in the main 

analysis. The Commission also assumes 

the number of in-person subscriptions, 

as proxied for by gym memberships, is 

the same as in the main analysis. What 

differs here is the approach for 

determining the share of cancellations 

likely to occur through online and 

telephone methods. 

The main analysis uses enforcement 

data to determine the share of 

cancellations likely to occur through 

online and telephone methods. This 

data may suffer from selection bias if, 

among other factors, only the more 

egregious violations are pursued 

through enforcement methods. This 

approach also assumes no marketers of 

negative option plans comply with this 

Rule in the baseline. Further, because 

the data only include resolved cases and 

resolved cases tend to be older, they are 

less likely to reflect the current state of 

the market. 

In this alternative analysis, the 

Commission uses statistics discussed in 

the NPRM—that 106,000 firms offer 

negative option plans and 2,000 of those 

firms are telemarketers.616 Based on 

that, the Commission assumes 1.9 

percent (i.e., 2,000/106,000) of 

subscriptions and cancellations are 

enrolled and cancelled over the phone 

in the baseline. The Commission then 

assumes the remaining cancellations of 

subscriptions that were not enrolled 

over the phone or in person were 

instead enrolled online.617

To estimate the distribution of 

baseline cancellation methods of 

subscriptions enrolled online, the 

Commission uses the results from an 

experiment in which a researcher 

consented to 16 online subscriptions 

between August 2 to October 4, 2022 

and then canceled each one, recording 

the time it took to cancel along with a 

variety of other obstacles faced in 

cancelling.618 Of the 16 online 

subscriptions, three were found to be 

easy to cancel online, indicating they 

are likely in compliance with this Rule; 

three required phone calls to cancel; 

and the remaining 10 had a nonstraightforward online cancellation 

method. Based on these results, the 

Commission assumes 18.75 percent (i.e., 

3/16) of online subscriptions have Rulecompliant cancellation methods in the 

baseline; 18.75 percent (i.e., 3/16) of 

online subscriptions require telephone 

cancellation in the baseline; and 62.5 

percent (i.e., 10/16) of online 

subscription offer non-Rule-compliant 

online cancellations in the baseline. 

Table 8 provides the number of 

subscription cancellations each year 

distributed across the enrollment and 

regulatory baseline cancellation 

methods: online enrollment and 

telephone cancellation; online 

enrollment and non-Rule-compliant 

online cancellation; online enrollment 

and Rule-compliant online cancellation; 

telephone enrollment and telephone 

cancellation; and in-person enrollment. 


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Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 90533 

TABLE 8—SENSITIVITY ANALYSIS: CANCELLATIONS BY ENROLLMENT AND BASELINE CANCELLATION METHOD

[In millions] 

Year 

Online 

enrollment, 

telephone 

cancellation 

Online 

enrollment, 

non-compliant 

online 

cancellation 

Online 

enrollment, 

compliant 

online 

cancellation 

Telephone 

enrollment, 

telephone 

cancellation 

In-person 

enrollment 

1 ........................................................................................... 63.79 212.63 63.79 6.87 14.62 

2 ........................................................................................... 64.28 214.27 64.28 6.93 14.73 

3 ........................................................................................... 64.78 215.92 64.78 6.98 14.84 

4 ........................................................................................... 65.27 217.56 65.27 7.03 14.96 

5 ........................................................................................... 65.76 219.21 65.76 7.08 15.07 

6 ........................................................................................... 66.26 220.85 66.26 7.14 15.18 

7 ........................................................................................... 66.66 222.19 66.66 7.18 15.27 

8 ........................................................................................... 67.06 223.54 67.06 7.22 15.37 

9 ........................................................................................... 67.46 224.88 67.46 7.27 15.46 

10 ......................................................................................... 67.87 226.23 67.87 7.31 15.55 

(2) Estimating Total Benefits 

To estimate total quantified benefits 

under this sensitivity analysis, the 

Commission uses the same matching of 

enrollment and baseline cancellation 

methods to per-cancellation benefit 

estimates as in the main analysis. The 

only difference here is that the 

Commission assumes consumers who 

experience Rule-compliant online 

cancellations in the baseline will not see 

any additional benefit as a result of this 

final Rule. 

As in the main analysis, the 

Commission multiplies the number of 

cancellations in each category by the 

matched per-cancellation benefit on the 

low- and the high-end and then sums 

across all five categories to obtain total 

quantified benefits each year. Those 

totals are presented in Table 9 below. In 

the first year following implementation 

of the final Rule, the Commission 

estimates the benefits under this 

sensitivity analysis will range between 

$254.85 million and $4.88 billion. In 

Year 10, the Commission estimates the 

benefits will range between $271.15 

million and $5.20 billion. Using a 2 

percent discount rate, the Commission 

estimates the present discounted value 

of benefits over 10 years to range 

between $2.36 and $45.28 billion. 

Annualized over 10 years using a 2 

percent discount rate, the Commission 

estimates the benefits to range between 

$263.06 million and $5.04 billion per 

year. These annualized benefits 

estimates are between $419.77 and 

$449.53 million less per year than the 

estimates from the main analysis. 

TABLE 9—SENSITIVITY ANALYSIS: ESTIMATES OF BENEFITS

[In millions, 2023 dollars] 

Year Low High 

1 ............................................................................................................................................................................... $254.85 $4,883.26 

2 ............................................................................................................................................................................... 256.82 4,921.01 

3 ............................................................................................................................................................................... 258.79 4,958.77 

4 ............................................................................................................................................................................... 260.76 4,996.53 

5 ............................................................................................................................................................................... 262.73 5,034.29 

6 ............................................................................................................................................................................... 264.70 5,072.05 

7 ............................................................................................................................................................................... 266.31 5,102.91 

8 ............................................................................................................................................................................... 267.92 5,133.77 

9 ............................................................................................................................................................................... 269.54 5,164.63 

10 ............................................................................................................................................................................. 271.15 5,195.49 

Present Discounted Value of Benefits over 10 years, 2% discount rate ......................................................... 2,362.97 45,277.43 

Annualized Benefits over 10 years, 2% discount rate ..................................................................................... 263.06 5,040.58 

Difference in Annualized Benefits from Main Analysis .................................................................................... ¥419.77 ¥449.53 

4. An explanation of the reasons for 

the determination of the Commission 

that the final Rule will attain its 

objectives in a manner consistent with 

applicable law and the reasons the 

particular alternative was chosen. 

As discussed above in sections I, II, 

and VII.A, the Commission determines 

the following deceptive or unfair 

practices are widespread in the negative 

option marketplace and cause consumer 

harm: (1) material misrepresentations 

made while marketing goods or services 

with negative option features; (2) failure 

to provide important information about 

material terms prior to obtaining 

consumers’ billing information and 

charging consumers; (3) lack of 

informed consumer consent; and (4) 

failure to provide consumers with a 

simple cancellation method, including 

failure to honor cancellation requests, 

refusal to provide refunds to consumers 

who unknowingly enrolled in programs, 

denying consumers refunds and forcing 

them to pay to return the unordered 

goods, and requiring consumers to 

cancel using a different method than the 

one used to sign up for the program. 

The final Rule amendments prohibit 

sellers from misrepresenting material 

facts in connection with promoting or 

offering for sale a good or service with 

a negative option feature, require 

negative option sellers to disclose 

certain important information about 

negative option features, obtain a 

consumer’s express informed consent 

and maintain records of consumer 

consent for three years after the initial 

transaction (unless the seller satisfies 


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619NCTA, FTC–2023–0033–0858; IAB, FTC– 

2023–0033–1000. See also IFA, FTC–2023–0033– 

0856; USTelecom, FTC–2023–0033–0876; RILA, 

FTC–2023–0033–0883; Coalition, FTC–2023–0033– 

0884; Chamber, FTC–2023–0033–0885 (urging the 

Commission to refine its cost benefit analysis). 

620FTC–2024–0001–0011; see also Asurion, FTC– 

2023–0033–0878 (stating the Commission’s 

estimated annual labor costs are understated, and 

projecting the costs to Asurion and its clients would 

be millions of dollars); SCIC, FTC–2023–0033–0879 

(cost of compliance for the service contract industry 

would be substantially higher than cost of 

compliance for unregulated entities, and 

disproportionately borne by small businesses; 

APCIA, FTC–2023–0033–0996 (same). 

621See 5 U.S.C. 603–605. 

622 5 U.S.C. 605. 

623NFIB, FTC–2023–0033–0789. 

624 IFA, FTC–2023–0033–0856; IHRSA, FTC– 

2023–0033–0863. 

625 IHRSA, FTC–2023–0033–0863. 

626ACT App Association, FTC–2023–0033–0874. 

627PDMI, FTC–2023–0033–0864; ESA, FTC– 

2023–0033–0867; Joint Small Business Digital 

Economy Innovators, FTC–2023–0033–0875; ICA, 

FTC–2023–0033–1142. 

628https://www.ftc.gov/business-guidance. 

the technological exemption), and 

provide consumers a simple mechanism 

for cancellation. In promulgating the 

final Rule, the Commission sought to 

enhance consumer protections while 

avoiding detailed, prescriptive 

requirements that would impede 

innovation. 

5. A summary of any significant 

issues raised by the comments 

submitted during the public comment 

period in response to the preliminary 

regulatory analysis and a summary of 

the assessment by the Commission of 

such issues. 

Several commenters (e.g., NCTA, IAB) 

raised concerns over the Commission’s 

conclusions regarding the economic 

effect of the proposed Rule. NCTA 

asserted the NPRM lacked any 

meaningful cost-benefit analysis, 

suggesting compliance with the 

proposed Rule would result in 

significant costs to its members.619

Among other things, NCTA said its 

members would be required to 

implement changes to their existing 

customer processes, review and revise 

existing disclosures, and revamp 

recordkeeping systems. During the 

informal hearing process, NCTA further 

argued it could cost major cable 

operator members between $12–25 

million to comply with the proposed 

Rule.620 Additional commenters also 

suggested compliance with the 

proposed Rule would cost more than 

what the Commission estimated. None 

of them, however, offered any empirical 

analysis of the issue. In response to 

these comments, and following the 

presiding officer’s recommended 

decision, the Commission provides the 

detailed cost-benefit analysis above in 

Section X.B.3. 

XI. Final Regulatory Flexibility Act 

Analysis 

The Regulatory Flexibility Act 

(‘‘RFA’’), 5 U.S.C. 601–612, requires the 

Commission to conduct an Initial 

Regulatory Flexibility Analysis 

(‘‘IRFA’’) with a proposed rule and a 

Final Regulatory Flexibility Analysis 

(‘‘FRFA’’), if any, with a final rule, 

unless the Commission certifies the rule 

will not have a significant economic 

impact on a substantial number of small 

entities.621 The Regulatory Flexibility 

Act further states the required elements 

of the FRFA may be performed in 

conjunction with or as part of any other 

agenda or analysis required by any other 

law if such other analysis satisfies the 

provisions of the FRFA.622

In the NPRM, the Commission 

provided an IRFA, stating its belief that 

the proposal will not have a significant 

economic impact on small entities, and 

solicited comments on the burden on 

any small entities that would be 

covered. Specifically, the Commission 

acknowledged it did not have sufficient 

empirical data to determine whether the 

proposed amendments may affect a 

substantial number of small entities; 

therefore, the Commission sought 

comment on the percentage of affected 

companies that qualify as small 

businesses. 

The Commission reviewed and 

considered the comments in response to 

the NPRM and determined, as an 

alternative to finalizing the proposed 

Rule in its entirety, to modify the Rule. 

In particular, the Commission decided 

to limit the material terms to be 

disclosed immediately adjacent to 

consent for the negative option feature; 

remove the limitation on saves and the 

accompanying recordkeeping 

requirement; remove the annual 

reminder provision; and modify the 

length of the recordkeeping requirement 

for verification of consent by fixing it to 

three years and provide an alternative 

method of compliance. After careful 

consideration of the comments and 

following the Commission’s 

determination not to finalize the 

proposed Rule in its entirety, the 

Commission certifies that the final Rule 

will not have a significant economic 

impact on a substantial number of small 

entities. Nevertheless, because the 

Commission included an IFRA in the 

NPRM, the Commission has also 

performed an FRFA below, and 

comments to the IFRA are discussed 

below. 

A. A statement of the need for, and 

objectives of, the Rule. 

The Commission describes the need 

for and the objectives of the final Rule 

in section X.B.1 to the Final Regulatory 

Analysis. 

B. A statement of the significant 

issues raised by the public comments in 

response to the Initial Regulatory 

Flexibility Analysis, a statement of the 

assessment of the agency of such issues, 

and a statement of any changes made in 

the proposed Rule as a result of such 

comments. 

Several commenters raised issues 

about the proposed Rule’s economic 

impact on small businesses. For 

instance, NFIB asked the Commission to 

adopt a special provision that would 

limit enforcement of the Rule against 

small businesses (fewer than 50 

employees) to instances of willful or 

repeated violations, and set up a 

program for education on 

compliance.623 IFA and IHRSA 

encouraged the Commission to conduct 

a ‘‘Small Business Regulatory Impact 

Analysis’’ to determine how the 

proposal will impact small 

businesses.624 IHRSA stated that small 

businesses in the health and fitness 

industry operate at ‘‘much different 

capacity’’ than larger industries, noting 

44% of U.S. small businesses have less 

than three months of cash reserves, 

making them more vulnerable to 

disruptions.625 Similarly, ACT App 

Association noted that roughly 20% of 

small business startups fail in the first 

year due to scarcity in financial 

resources.626

Other commenters, including PDMI, 

ESA, Joint Small Business Digital 

Economy Innovators, and ICA, generally 

stated the proposed Rule would impose 

unnecessary and undue burdens on 

small businesses, but did not offer any 

detailed empirical data for the 

Commission to consider.627

In response, the Commission first 

notes its sensitivity to small businesses’ 

concerns. It provides numerous free 

resources through the Bureau of 

Consumer Protection Business Center 

web page 628 to assist businesses of all 

sizes in complying with the law and 

will engage in consumer and business 

education campaigns about this Rule. 

Second, in consideration of comments 

regarding regulatory burden, the 

Commission clarifies or modifies the 

Rule in several significant ways: (1) it 

defines ‘‘material’’ and provides several 

concrete categories of material facts to 

ensure businesses have a clear 

understanding of how it will interpret 

materiality under the Rule; (2) it limits 

the number of terms that must 

mandatorily appear ‘‘immediately 

adjacent’’ to the request for consent to 


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Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 90535 

629Rule § 425.2(g). 

631Recommended Decision by Presiding Officer, 

https://www.regulations.gov/comment/FTC-2024- 

0001-0042 (emphasis in original). 

the negative option feature; (3) it 

removes the requirement to obtain 

separate affirmative consent to ‘‘the rest 

of the transaction’’ and modifies the 

recordkeeping requirement; (4) it 

removes the saves and annual reminder 

requirements, which also should reduce 

recordkeeping and compliance burdens. 

Additionally, the Commission delays 

the effective date of the final Rule for 

180 days to allow time for 

implementation (except for the 

provisions related to misrepresentations 

and other procedural requirements, 

which should not be an added burden 

for businesses already complying with 

the law and which take effect 60 days 

after publication of the final Rule). 

C. The response of the agency to any 

comments filed by the Chief Counsel for 

Advocacy of the Small Business 

Administration in response to the 

proposed Rule, and a detailed statement 

of any change made to the proposed 

rule in the final Rule as a result of the 

comments. 

The Small Business Administration 

did not file comments in response to the 

proposed Rule. 

D. A description of and an estimate of 

the number of small entities to which 

the Rule will apply or an explanation of 

why no such estimate is available. 

The final Rule affects sellers, 

regardless of industry, engaged in 

making negative option offers, defined 

by the final Rule to mean any person 

‘‘selling, offering, charging for, or 

otherwise marketing goods or services 

with a Negative Option Feature.’’ 629

Small entities in potentially any 

industry could incorporate a negative 

option feature into a sales 

transaction.630 The Commission is 

unaware, however, of any source of data 

identifying across every industry the 

number of small entities that routinely 

utilize negative option features. 

Although the NPRM requested 

comments on the percentage of affected 

companies that qualify as small 

businesses, and some trade association 

commenters indicated that some of their 

members were small businesses, these 

comments did not identify either the 

number or share of their small business 

members that sold negative option 

contracts. 

E. A description of the projected 

reporting, recordkeeping, and other 

compliance requirements of the Rule, 

including an estimate of the classes of 

small entities which will be subject to 

the requirement and the type of 

professional skills necessary for 

preparation of the report or record. 

The estimates of the recordkeeping 

requirements under the final Rule are 

set out within the Paperwork Reduction 

Act analysis in section XII below. As 

mentioned above, the Commission 

preliminarily determined the impact of 

the proposed requirements on small 

entities is most likely not significant. 

The small entities potentially covered 

by these amendments will include all 

such entities subject to the Rule (e.g., all 

entities selling goods or services 

through negative option programs). The 

professional skills necessary for 

compliance with the proposed 

amendments would include sales and 

clerical personnel. The Commission 

requested comment on these issues. 

In the NPRM, The FTC estimated the 

majority of firms subject to the 

recordkeeping requirements already 

retained these types of records in the 

normal course of business. The FTC 

anticipated many transactions subject to 

the final Rule would be conducted via 

the internet, minimizing burdens 

associated with compliance. 

Additionally, most entities subject to 

the final Rule were likely to store data 

though automated means, which 

reduces compliance burdens associated 

with record retention. Furthermore, 

regarding the disclosure requirements, 

the Commission stated it was likely the 

substantial majority of sellers routinely 

provide these disclosures in the 

ordinary course as a matter of good 

business practice. Moreover, many State 

laws already require the same or similar 

disclosures as the Rule would mandate. 

Finally, some negative option sellers are 

already covered by ROSCA and the TSR 

and thus subject to similar disclosure 

requirements. 

Commenters provided additional 

comments, suggesting small businesses 

will be significantly impacted, and the 

Commission underestimated the 

burdens. Recordkeeping and disclosure 

costs associated with the Rule became 

one of the issues designated for the 

informal hearing, after which the 

presiding officer determined ‘‘the issue 

is not genuinely disputed,’’ noting the 

failure of interested parties to ‘‘provide 

any evidence to establish what the costs 

would be,’’ as opposed to generalized 

complaints ‘‘costs will be higher than 

the NPRM’s estimates.’’ 631 As explained 

in the Paperwork Reduction Act 

estimates below and elsewhere in this 

SBP, the Commission made changes to 

the Rule based on the record. 

Specifically, the Commission 

determined to specify and thereby limit 

the types of disclosures required, 

narrow the scope of entities covered (by 

excluding those solely involved in 

‘‘promoting’’ negative option plans), 

curtail the length of time for retaining 

records (to only three years), and 

establish an option for sellers to 

eliminate having to keep records of 

consent if they have the requisite 

processes in place. Because neither the 

Commission nor the presiding officer at 

the informal hearing received evidence 

to dispute the recordkeeping and 

disclosure costs figures in the NPRM, 

the Commission adopts the NPRM’s 

analysis. Given the narrower scope of 

the final Rule, that analysis should be 

more conservative and tend to overstate 

the burden. 

F. A description of the steps the 

agency has taken to minimize the 

significant economic impact on small 

entities consistent with the stated 

objectives of applicable statutes, 

including a statement of the factual, 

policy, and legal reasons for selecting 

the alternative adopted in the final Rule 

and why each one of the other 

significant alternatives to the Rule 

considered by the agency which affect 

the impact on small entities was 

rejected. 

In formulating the proposed 

amendments, the Commission made 

every effort to avoid imposing unduly 

burdensome requirements on sellers. To 

that end, the Commission avoided, 

where possible, proposing specific, 

prescriptive requirements that could 

stifle marketing innovation or otherwise 

limit seller options in using new 

technologies. 

As explained above, in response to 

comments regarding regulatory burden, 

the Commission clarifies or modifies the 

Rule in several significant ways: (1) it 

defines ‘‘material’’ and provides several 

concrete categories of material facts to 

ensure businesses have a clear 

understanding of how it will interpret 

materiality under the Rule; (2) it limits 

the number of terms that must 

mandatorily appear ‘‘immediately 

adjacent’’ to the request for consent to 

the negative option feature; (3) it 

removes the requirement to obtain 

separate affirmative consent to ‘‘the rest 

of the transaction’’ and modifies the 

recordkeeping requirement; (4) it 

removes the saves and annual reminder 

requirements, which also should reduce 

recordkeeping and compliance burdens. 

Additionally, the Commission delays 

the effective date of the final Rule for 

180 days to allow time for 

implementation (except for the 

provisions related to misrepresentations 

and other procedural requirements, 

which should not be an added burden 


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90536 Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 

632The PRA analysis for this rulemaking focuses 

strictly on the information collection requirements 

created by and/or otherwise affected by the 

amendments. 

633 88 FR 24734. 

634Examples of these industries include sellers of 

software, streaming media, social media services, 

financial monitoring, computer security, fitness 

services, groceries and meal kits, dietary 

supplements, sporting goods, home service 

contracts, home security systems, office supplies, 

pet food, computer supplies, cleaning supplies, 

home/lawn maintenance services, personal care 

products, clothing sales, energy providers, 

newspapers, magazines, and books. The NAICS 

does not provide estimates for all of these 

categories. Where such data is unavailable, the staff 

has used its own estimates based on its knowledge 

of these industry categories. 

635Under the PRA, the time, effort, and financial 

resources necessary to comply with the collection 

of information that would be incurred by persons 

in the normal course of their activities (e.g., in 

compiling and maintaining business records) does 

not constitute a burden under the Rule where the 

associated recordkeeping is a usual and customary 

part of business activities. 5 CFR 1320.3(b)(2). 

636This figure is derived from the mean hourly 

wage shown for Information and Record Clerks. See 

Bureau of Labor Statistics, ‘‘Occupational 

Employment and Wages—May 2021,’’ at Table 1 

(Mar. 31, 2022) (National employment and wage 

data from the Occupational Employment Statistics 

survey by occupation, May 2021), https://

www.bls.gov/news.release/pdf/ocwage.pdf. 

637This figure is derived from the mean hourly 

wage shown for Sales and related occupations. See 

id. 

638 88 FR 24730. 

for businesses already complying with 

the law and which take effect 60 days 

after publication of the final Rule). 

XII. Paperwork Reduction Act 

The Paperwork Reduction Act 

(‘‘PRA’’), 44 U.S.C. 3501 et seq., requires 

Federal agencies to obtain Office of 

Management and Budget (‘‘OMB’’) 

approval before collecting information 

directed to ten or more persons. The 

current Rule contains various provisions 

that constitute information collection as 

defined by 5 CFR 1320.3(c), the OMB 

regulations implementing the PRA. In 

January 2024, OMB approved 

continuation of the Rule’s existing 

information collection (OMB Control 

No. 3084–0104). The final Rule makes 

changes in the Rule’s recordkeeping and 

disclosure requirements that will 

increase the PRA burden as detailed 

below. Accordingly, the Commission is 

submitting the final Rule and a 

Supplemental Supporting Statement to 

OMB for review under the PRA.632 The 

associated burden analysis follows. 

A. The Proposed Rule 

In the NPRM, the Commission 

provided time and cost estimates for the 

proposed Rule’s recordkeeping and 

disclosure requirements, and solicited 

comments about their associated costs, 

including on: (1) whether the 

disclosure, recordkeeping, and reporting 

requirements are necessary, including 

whether the resulting information will 

be practically useful; (2) the accuracy of 

our burden estimates, including 

whether the methodology and 

assumptions used are valid; (3) how to 

improve the quality, utility, and clarity 

of the disclosure requirements; and (4) 

how to minimize the burden of 

providing the required information to 

consumers.633

The NPRM also included staff’s 

estimate that the burden for 

recordkeeping compliance would be 

53,000 hours and the estimated burden 

for disclosures would be 212,000 hours, 

for a total of 265,000 hours. These 

estimates are explained below. 

Number of Respondents. FTC staff 

estimated there are 106,000 entities 

offering negative option features to 

consumers. This estimate is based 

primarily on data from the U.S. Census 

North American Industry Classification 

System (NAICS) for firms and 

establishments in industry categories 

wherein some sellers offer free trials, 

automatic renewal, prenotification 

plans, and continuity plans. Based on 

NAICS information as well as its own 

research and industry knowledge, FTC 

staff identified an estimated total of 

530,000 firms involved in such 

industries.634 However, FTC staff 

estimated that only a fraction of the total 

firms in these industry categories offer 

negative option features to consumers. 

For example, few grocery stores and 

clothing retailers, which account for 

approximately a third of the of the total 

estimate from all industry categories, are 

likely to regularly offer negative option 

features. In addition, some entities 

included in the total may qualify as 

common carriers, exempt from the 

Commission’s authority under the FTC 

Act. Accordingly, the Commission 

estimated approximately 106,000 

business entities (20%) offer negative 

option features to consumers. 

Recordkeeping Hours. FTC staff 

estimated the majority of firms subject 

to the Rule already retain the types of 

records in the normal course of business 

that would be required by the proposed 

Rule. Under such conditions, the time 

and financial resources needed to 

comply with disclosure requirements do 

not constitute ‘‘burden’’ under the 

PRA.635 Moreover, staff anticipated that 

many transactions subject to the Rule 

are conducted via the internet and most 

entities subject to the Rule are likely to 

store data though automated means, 

which reduces compliance burdens 

associated with record retention. 

Accordingly, staff estimated that 53,000 

entities subject to the Rule will require 

approximately one hour per year to 

comply with the Rule’s recordkeeping 

requirements, for an annual total of 

53,000 burden hours. 

Disclosure Hours. Staff anticipated 

that the substantial majority of sellers 

already routinely provide the 

disclosures that would be required by 

the proposed Rule. For these sellers, the 

time and financial resources associated 

with making these disclosures do not 

constitute a ‘‘burden’’ under the PRA 

because they are a usual and customary 

part of regular business practice. 5 CFR 

1320.3(b)(2). Moreover, many State laws 

require the same or similar disclosures 

as the Rule mandates. In addition, 

approximately 2,000 negative option 

sellers are already covered by the TSR 

and subject to its disclosure 

requirements. Accordingly, FTC 

estimated the disclosure burden 

required by the Rule will be, on average, 

two hours each year for each seller 

subject estimated to be subject the Rule, 

for a total estimated annual burden of 

212,000 hours. 

Estimated Annual Labor Cost. To 

estimate labor costs for recordkeeping 

requirements, staff multiplied the 

53,000 hours to comply with the 

proposed Rule’s recordkeeping 

provisions by a clerical wage rate of 

$18.75/hour.636 The result is an annual 

cost of approximately $993,750. 

To estimate annual labor costs for 

disclosures for all entities, staff 

multiplied the 212,000 hours to comply 

with the proposed Rule’s disclosure 

provisions by a sales personnel wage 

rate of $22.15/hour.637 The result is an 

annual cost of approximately 

$4,695,800. 

Thus, the estimated annual labor costs 

were $5,689,550 [($993,750 

recordkeeping) + ($4,695,800 

disclosure)]. 

Estimated Annual Non-Labor Cost. 

The NPRM stated capital and start-up 

costs associated with the Rule’s 

recordkeeping provisions are de 

minimis. Any disclosure or 

recordkeeping capital costs involved 

with the Rule, such as equipment and 

office supplies, would be costs borne by 

sellers in the normal course of business. 

B. Comments Received and Informal 

Hearing 

The NPRM sought comments on the 

PRA analysis and stated, ‘‘comments 

should provide any available evidence 

and data that supports their position, 

such as empirical data.’’ 638 The 

Commission did not receive such 

evidence. A few commenters from 

businesses and industry groups, 

however, raised generalized concerns 


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Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 90537 

639Sirius XM, FTC–2023–0033–0857; SCIC, FTC– 

2023–0033–0879; Coalition, FTC–2023–0033–0884; 

ETA, FTC–2023–0033–1004; Direct Marketing 

Companies, FTC–2023–0033–1016. In addition, one 

commenter seemingly confused PRA-related costs 

with full implementation of the Rule, but still 

offered only generalized points. See Asurion, FTC– 

2023–0033–0878. Another commenter queried 

whether the Commission’s estimate of the number 

of firms offering negative option features include 

B2B sales with automatic renewal clauses. ETA, 

FTC–2023–0033–1004. The staff estimate did not 

seek to exclude such sellers. 

640Hr’g Notice, 88 FR 85525. 

641Recommended Decision by Presiding Officer, 

https://www.regulations.gov/comment/FTC-2024- 

0001-0042. 

642Recommended Decision by Presiding Officer, 

https://www.regulations.gov/comment/FTC-2024- 

0001-0042. 

643Recommended Decision by Presiding Officer, 

https://www.regulations.gov/comment/FTC-2024- 

0001-0042. 

644Under the PRA, the time, effort, and financial 

resources necessary to comply with the collection 

of information that would be incurred by persons 

in the normal course of their activities (e.g., in 

compiling and maintaining business records) does 

not constitute a burden under the Rule where the 

associated recordkeeping is a usual and customary 

part of business activities. 5 CFR 1320.3(b)(2). 

645This figure is derived from the mean hourly 

wage shown for Information and Record Clerks. See 

Bureau of Labor Statistics, ‘‘Occupational 

Employment and Wages, May 2023, 43–9061 Office 

Clerks, General,’’ https://www.bls.gov/oes/currenT/ 

oes439061.htm. 

646This figure is derived from the mean hourly 

wage shown for Sales and related occupations. See 

id. 

that the NPRM underestimated PRArelated costs.639

As noted earlier, the Commission set 

an informal hearing, at the request of 

interested parties, and appointed 

Administrative Law Judge Carol Fox 

Foelak as the presiding officer.640 Based 

on submissions by interested parties, 

and other information in the record, the 

presiding officer designated two 

disputed issues of material fact, 

including, ‘‘What will the recordkeeping 

and disclosure costs associated with the 

proposed rule be?’’ 641

Based on the record, the presiding 

officer concluded, ‘‘There is insufficient 

evidence to make a finding concerning 

the . . . recordkeeping and disclosure 

costs associated with the proposed 

rule,’’ and ‘‘in the absence of evidence, 

the issue is not genuinely disputed.’’ 642

The presiding officer further explained: 

‘‘IAB made a well-reasoned argument 

that the costs will be higher than the 

NPRM’s estimates, generalizing from 

limited estimates that it, IFA, and NCTA 

provided. However, it did not provide 

any evidence to establish what the costs 

would be.’’ 643

C. Final PRA Analysis 

As previously discussed, the 

Commission made changes to the Rule 

based on the record. Some of these 

changes, in turn, affect the PRA 

analysis. Specifically, the Commission 

determined to specify and thereby limit 

the types of disclosures required, 

narrow the scope of entities covered (by 

excluding those solely involved in 

‘‘promoting’’ negative option plans), 

curtail the length of time for retaining 

records (to only three years), and 

establish an option for sellers to 

eliminate having to keep records of 

consent if they have the requisite 

processes in place. Neither the 

Commission nor the presiding officer at 

the informal hearing received evidence 

to dispute the specific PRA-related 

figures in the NPRM. For the final Rule, 

the Commission adopts the following 

PRA analysis. 

Number of Respondents. The 

Commission received no evidence to 

dispute the NPRM’s statements on the 

number of entities offering negative 

option features to consumers, so the 

Commission adopts the NPRM estimate 

that there are 106,000 such entities. 

Although the final Rule is narrower in 

that it excludes the term ‘‘promote’’ 

from its scope, the Commission retains 

the estimate of 106,000 entities for the 

purposes of this analysis, which would 

be more conservative and tend to 

overstate the burden. 

Recordkeeping Hours. The 

Commission received no evidence to 

dispute the NPRM’s statements on 

recordkeeping under the PRA. As the 

final Rule is narrower, the time and 

financial resources needed to comply 

with disclosure requirements still do 

not constitute ‘‘burden’’ under the 

PRA.644 Accordingly, the Commission 

adopts the NPRM estimate that 53,000 

entities subject to the Rule will require 

approximately one hour per year to 

comply with the Rule’s recordkeeping 

requirements, for an annual total of 

53,000 burden hours. 

Disclosure Hours. Similarly, the 

Commission received no evidence to 

dispute the NPRM’s statements on 

disclosure hours under the PRA. As the 

final Rule narrowed and delineated the 

types of disclosures required, the time 

and financial resources associated with 

making these disclosures is even less 

than under the proposed Rule, which 

also did not constitute a ‘‘burden’’ 

under the PRA because they are a usual 

and customary part of regular business 

practice. 5 CFR 1320.3(b)(2). 

Accordingly, the Commission adopts 

the NPRM estimate that the disclosure 

burden required by the Rule will be, on 

average, two hours each year for each 

seller subject estimated to be subject the 

Rule, for a total estimated annual 

burden of 212,000 hours. 

Estimated Annual Labor Cost. The 

Commission received no evidence to 

dispute the NPRM’s statements on labor 

costs under the PRA. For the final Rule, 

the Commission updates its labor cost 

estimates by using more recent wage 

data. For recordkeeping, staff multiplied 

the 53,000 estimated hours to comply 

with the Rule’s recordkeeping 

provisions by a clerical wage rate of 

$20.94/hour,645 to yield an annual cost 

of approximately $1,109,820. For 

disclosure compliance, staff multiplied 

the 212,000 estimated hours by an 

hourly wage rate for sales personnel of 

$25.62,646 to yield an annual cost of 

$5,431,440. Thus, the estimated total 

annual labor costs are $6,541,260 

[($1,109,820 recordkeeping) + 

($5,431,440 disclosure)]. 

Estimated Annual Non-Labor Cost. 

The Commission received no evidence 

to dispute the NPRM’s statements that 

capital and start-up costs associated 

with the Rule’s recordkeeping 

provisions are de minimis under the 

PRA. The Commission adopts those 

findings. 

List of Subjects in 16 CFR Part 425 

Advertising, Consumer protection, 

Trade practices. 

■ For the reasons stated in the preamble, 

the Federal Trade Commission revises 

16 CFR part 425 to read as follows: 

PART 425—RULE CONCERNING 

RECURRING SUBSCRIPTIONS AND 

OTHER NEGATIVE OPTION 

PROGRAMS 

Sec. 

425.1 Scope. 

425.2 Definitions. 

425.3 Misrepresentations. 

425.4 Important information. 

425.5 Consent. 

425.6 Simple cancellation (‘‘Click to 

Cancel’’). 

425.7 Relation to State laws. 

425.8 Exemptions. 

425.9 Severability. 

Authority: 15 U.S.C. 41 through 58. 

§ 425.1 Scope. 

This Rule contains requirements 

related to any form of negative option 

program in any media, including, but 

not limited to, Interactive Electronic 

Media, telephone, print, and in-person 

transactions. 

§ 425.2 Definitions. 

Billing Information means any data 

that enables any person to access a 

consumer’s account, such as a credit 

card, checking, savings, share or similar 

account, utility bill, mortgage loan 

account, or debit card. 


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90538 Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 

Charge, Charged, or Charging means 

any attempt to collect money or other 

consideration from a consumer, 

including but not limited to causing 

Billing Information to be submitted for 

payment, including against the 

consumer’s credit card, debit card, bank 

account, telephone bill, or other 

account. 

Clear and Conspicuous means that a 

required disclosure is easily noticeable 

(i.e., difficult to miss) and easily 

understandable by ordinary consumers, 

including in all of the following ways: 

(1) In any communication that is 

solely visual or solely audible, the 

disclosure must be made through the 

same means through which the 

communication is presented. In any 

communication made through both 

visual and audible means, such as a 

television advertisement, the disclosure 

must be presented simultaneously in 

both the visual and audible portions of 

the communication even if the 

representation requiring the disclosure 

is made in only one means. 

(2) A visual disclosure, by its size, 

contrast, location, the length of time it 

appears, and other characteristics, must 

stand out from any accompanying text 

or other visual elements so that it is 

easily noticed, read, and understood. 

(3) An audible disclosure, including 

by telephone or streaming video, must 

be delivered in a volume, speed, and 

cadence sufficient for ordinary 

consumers to easily hear and 

understand it. 

(4) In any communication using an 

Interactive Electronic Medium, such as 

the internet, mobile application, or 

software, the disclosure must be 

unavoidable. 

(5) The disclosure must use diction 

and syntax understandable to ordinary 

consumers and must appear in each 

language in which the representation 

that requires the disclosure appears. 

(6) The disclosure must comply with 

these requirements in each medium 

through which it is received, including 

all electronic devices and face-to-face 

communications. 

(7) The disclosure must not be 

contradicted or mitigated by, or 

inconsistent with, anything else in the 

communication. 

(8) When the representation or sales 

practice targets a specific audience, 

such as children, older adults, or the 

terminally ill, ‘‘ordinary consumers’’ 

includes members of that group. 

Interactive Electronic Medium is any 

electronic means of communicating 

(except via telephone calls), including 

internet, mobile application, text, chat, 

instant message, email, software, or any 

online service. 

Material means likely to affect a 

person’s choice of, or conduct regarding, 

goods or services. 

Negative Option Feature is a 

provision of a contract under which the 

consumer’s silence or failure to take 

affirmative action to reject a good or 

service or to cancel the agreement is 

interpreted by the negative option seller 

as acceptance or continuing acceptance 

of the offer, including, but not limited 

to: 

(1) An automatic renewal; 

(2) A continuity plan; 

(3) A free-to-pay conversion or fee-topay conversion; or 

(4) A pre-notification negative option 

plan. 

Negative Option Seller means the 

person selling, offering, charging for, or 

otherwise marketing a good or service 

with a Negative Option Feature. 

§ 425.3 Misrepresentations. 

In connection with promoting or 

offering for sale any good or service 

with a Negative Option Feature, it is a 

violation of this part and an unfair or 

deceptive act or practice in violation of 

section 5 of the Federal Trade 

Commission Act (‘‘FTC Act’’) for any 

Negative Option Seller to misrepresent, 

expressly or by implication, any 

Material fact, including any of the 

following: 

(a) The Negative Option Feature or 

any term of the Negative Option 

Feature, including consumer consent, 

any deadline to prevent or stop a 

Charge, or the cancellation of the 

Negative Option Feature; 

(b) Cost; 

(c) Purpose or efficacy of the 

underlying good or service; 

(d) Health or safety; or 

(e) Any other Material fact. 

§ 425.4 Important information. 

(a) Disclosures. In connection with 

promoting or offering for sale any good 

or service with a Negative Option 

Feature, it is a violation of this part and 

an unfair or deceptive act or practice in 

violation of section 5 of the FTC Act for 

a Negative Option Seller to fail to 

disclose to a consumer, prior to 

obtaining the consumer’s Billing 

Information, all Material terms, 

regardless of whether those terms 

directly relate to the Negative Option 

Feature, and including but not limited 

to: 

(1) That consumers will be Charged 

for the good or service, or that those 

Charges will increase after any 

applicable trial period ends, and, if 

applicable, that the Charges will be on 

a recurring basis, unless the consumer 

timely takes steps to prevent or stop 

such Charges; 

(2) Each deadline (by date or 

frequency) by which the consumer must 

act to prevent or stop the Charges; 

(3) The amount (or range of costs) the 

consumer will be Charged and, if 

applicable, the frequency of the Charges 

a consumer will incur unless the 

consumer takes timely steps to prevent 

or stop those Charges; and 

(4) The information necessary for the 

consumer to find the simple 

cancellation mechanism required 

pursuant to § 425.6. 

(b) Form and content of required 

information. (1) Clear and Conspicuous: 

Each disclosure required by paragraph 

(a) of this section must be Clear and 

Conspicuous. 

(2) Placement: 

(i) The disclosures required by 

paragraphs (a)(1) through (4) of this 

section must appear immediately 

adjacent to the means of recording the 

consumer’s consent for the Negative 

Option Feature; and 

(ii) The disclosures required by 

paragraph (a) of this section (including, 

but not limited to, the disclosures 

required by paragraphs (a)(1) through (4) 

of this section) must appear before 

obtaining the consent required pursuant 

to § 425.5. 

(3) Other Information: All 

communications, regardless of media, 

must not contain any other information 

that interferes with, detracts from, 

contradicts, or otherwise undermines 

the ability of consumers to read, hear, 

see, or otherwise understand the 

disclosures required by paragraph (a) of 

this section. 

§ 425.5 Consent. 

(a) Express informed consent. In 

connection with promoting or offering 

for sale any good or service with a 

Negative Option Feature, it is a violation 

of this part and an unfair or deceptive 

act or practice in violation of section 5 

of the FTC Act for a Negative Option 

Seller to fail to obtain the consumer’s 

express informed consent before 

Charging the consumer. In obtaining 

such expressed informed consent, the 

Negative Option Seller must: 

(1) Obtain the consumer’s 

unambiguously affirmative consent to 

the Negative Option Feature offer 

separately from any other portion of the 

transaction; 

(2) Not include any information that 

interferes with, detracts from, 

contradicts, or otherwise undermines 

the ability of consumers to provide their 

express informed consent to the 

Negative Option Feature; and 

(3) Keep or maintain verification of 

the consumer’s consent for at least three 

years. However, if the seller can 


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Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 90539 

1See Negative Option Rule, 88 FR 24716, 24736 

(proposed Apr. 24, 2023) (‘‘Annual reminders for 

negative option features not involving physical 

goods.’’) (to be codified at 16 CFR 425.7), https:// 

www.federalbregister.gov/documents/2023/04/24/ 

2023-07035/negative-option-rule. 

demonstrate by a preponderance of the 

evidence that it uses processes ensuring 

no consumer can technologically 

complete the transaction without 

consent, such seller does not have to 

maintain these records for such 

transactions. 

(b) Requirements for Negative Option 

Features covered in the Telemarketing 

Sales Rule. Negative Option Sellers 

covered by the Telemarketing Sales Rule 

must comply with all applicable 

requirements provided in 16 CFR part 

310, including, for transactions 

involving preacquired account 

information and a free-to-pay– 

conversion feature, obtaining from the 

customer, at a minimum, the last four 

(4) digits of the account number to be 

charged and making and maintaining an 

audio recording of the entire 

telemarketing transaction as required by 

16 CFR part 310. 

(c) Documentation of unambiguously 

affirmative consent for written offers. 

Except for transactions covered by the 

preauthorized transfer provisions of the 

Electronic Fund Transfer Act (15 U.S.C. 

1693e) and Regulation E (12 CFR 

1005.10), a Negative Option Seller will 

be deemed in compliance with the 

requirements of paragraph (a)(1) of this 

section for all written offers (including 

over the internet or phone applications), 

if that seller obtains the required 

consent through a check box, signature, 

or other substantially similar method, 

which the consumer must affirmatively 

select or sign to accept the Negative 

Option Feature and no other portion of 

the transaction. The consent request 

must be presented in a manner and 

format that is clear, unambiguous, nondeceptive, and free of any information 

not directly related to the consumer’s 

acceptance of the Negative Option 

Feature. 

§ 425.6 Simple cancellation (‘‘Click to 

Cancel’’). 

(a) Simple mechanism required for 

cancellation. In connection with 

promoting or offering for sale any good 

or service with a Negative Option 

Feature, it is a violation of this Rule and 

an unfair or deceptive act or practice in 

violation of section 5 of the FTC Act for 

the Negative Option Seller to fail to 

provide a simple mechanism for a 

consumer to cancel the Negative Option 

Feature; avoid being Charged, or 

Charged an increased amount, for the 

good or service; and immediately stop 

any recurring Charges. 

(b) Simple mechanism at least as 

simple as consent. The simple 

mechanism required by paragraph (a) of 

this section must be at least as easy to 

use as the mechanism the consumer 

used to consent to the Negative Option 

Feature. 

(c) Minimum requirements for simple 

mechanism. At a minimum, the 

Negative Option Seller must provide the 

simple mechanism required by 

paragraphs (a) and (b) of this section 

through the same medium the consumer 

used to consent to the Negative Option 

Feature, and: 

(1) For cancellation by Interactive 

Electronic Medium, the simple 

cancellation mechanism must be easy to 

find when the consumer seeks to cancel. 

Compliance with the disclosure 

required under § 425.4(a)(4) does not 

discharge this obligation. In no event 

shall a consumer be required to interact 

with a live or virtual representative 

(such as a chatbot) to cancel if the 

consumer did not do so to consent to 

the Negative Option Feature. 

(2) For cancellation by telephone call, 

the Negative Option Seller must 

promptly effectuate cancellations 

requested by the consumer via a 

telephone number that is answered or 

records messages, made available during 

normal business hours, and not more 

costly to use than the telephone call the 

consumer used to consent to the 

Negative Option Feature. 

(3) For cancellation of consent 

obtained in person, in addition to 

offering cancellation, where practical, 

via an in-person method similar to that 

the consumer used to consent to the 

Negative Option Feature, the Negative 

Option Seller must offer the simple 

mechanism through an Interactive 

Electronic Medium or by providing a 

telephone number. The alternate simple 

mechanism required by this paragraph 

must satisfy all requirements of 

paragraphs (c)(1) and (2) of this section, 

as applicable. If the Negative Option 

Seller offers the alternate mechanism by 

providing a telephone number, the 

seller shall not erect a cost-barrier to 

cancellation by imposing any 

unnecessary or unreasonable cost for the 

cancellation call. 

§ 425.7 Relation to State laws. 

(a) In general. This part shall not be 

construed as superseding, altering, or 

affecting any State statute, regulation, 

order, or interpretation relating to 

negative option requirements, except to 

the extent it is inconsistent with the 

provisions of this part, and then only to 

the extent of the inconsistency. 

(b) Greater protection under State law. 

For purposes of this section, a State 

statute, regulation, order, or 

interpretation is not inconsistent with 

the provisions of this part if it affords 

any consumer greater protection than 

provided under this part. 

§ 425.8 Exemptions. 

Any person to whom this part applies 

may petition the Commission for a 

partial or full exemption. The 

Commission may, in response to 

petitions or on its own authority, issue 

partial or full exemptions from this part 

if the Commission finds application of 

this part’s requirements is not necessary 

to prevent the acts or practices to which 

this part relates. The Commission shall 

resolve petitions using the procedures 

provided in 16 CFR 1.31. If appropriate, 

the Commission may condition such 

exemptions on compliance with 

alternative standards or requirements to 

be prescribed by the Commission. 

§ 425.9 Severability. 

The provisions of this part are 

separate and severable from one 

another. If any provision is stayed or 

determined to be invalid, the remaining 

provisions shall continue in effect. 

By direction of the Commission, 

Commissioners Holyoak and Ferguson 

dissenting. 

April J. Tabor, 

Secretary. 

Note: The following statements will not 

appear in the Code of Federal Regulations. 

Statement of Commissioner Rebecca 

Kelly Slaughter 

As is common in rulemaking proceedings, 

this Final Rule that the Commission 

promulgates is somewhat different from what 

it originally proposed—clarified, narrowed, 

and ultimately improved by the process of 

grappling with the substantial record of 

comments submitted by the public. I extend 

my heartfelt thanks to everyone who 

submitted comments; to the talented staff in 

our Division of Enforcement and the East 

Central Regional Office who diligently 

shepherded this proceeding, thoroughly 

considered all those comments, and 

recommended thoughtful revisions; and to 

my colleagues for their deep engagement 

with this issue of great importance, including 

former Chairman Joe Simons, under whose 

leadership the Commission initiated this 

rulemaking proceeding. 

I write separately to draw attention to the 

comment record about a provision that the 

Commission proposed but ultimately does 

not finalize, proposed § 425.7, which would 

have required annual reminders of 

subscriptions that do not involve the delivery 

of physical goods.1 Americans understand 

the importance and value of such a 

requirement; many have discovered that they 

or their parents had been paying for years or 

even decades for a service wholly unused, 

such as a dial-up internet service from the 


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90540 Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 

2See, e.g., Cmt. of the Attorneys General of New 

York, Pennsylvania, Alabama, Arizona, California, 

Colorado, Connecticut, Delaware, District of 

Columbia, Hawaii, Illinois, Maine, Maryland, 

Massachusetts, Michigan, Minnesota, Nebraska, 

Nevada, New Jersey, North Carolina, North Dakota, 

Oklahoma, Oregon, Vermont, Washington, and 

Wisconsin (June 23, 2023), at 15 (‘‘Subscription 

management has become an entire industry; 

consumers can choose from a variety of companies 

that offer to monitor their recurring subscriptions. 

We believe that consumers should not have to sign 

up for yet another service—one that comes with 

privacy and security risks, as subscription 

monitoring services require sharing financial 

account and other sensitive information—in order 

to effectively manage their subscriptions.’’), https:// 

www.regulations.gov/comment/FTC-2023-0033- 

0886; Cmt. of Consumer Action, Consumer 

Federation of America, Demand Progress Education 

Fund, National Association of Consumer 

Advocates, National Consumer Law Center (on 

behalf of its low-income clients), and National 

Consumer League (June 23, 2023), at 7 (‘‘Consumers 

deserve to know when they are about to be charged 

automatically, with a chance to opt out.’’), https:// 

www.regulations.gov/comment/FTC-2023-0033- 

0880; Cmt. of Profs. Caruso, Raghavan, Sovern, 

Vladeck, Pridgen, Janger, Ondersma, and Block-Lieb 

(June 23, 2023), at 7–8 (encouraging the 

Commission to adopt the reminder requirement 

without narrowing it), https://www.regulations.gov/ 

comment/FTC-2023-0033-0861. 

3See Fed. Trade Comm’n, Negative Option Rule, 

Final Rule Statement of Basis and Purpose (Oct. 16, 

2024) (draft as submitted to the Office of the Federal 

Register), at 138–44. 

4See 2024 Va. Acts, H. 744, Apr. 4, 2024 (to be 

codified at section 59.1–207.46(E)), https://

legacylis.virginia.gov/cgi-bin/legp604.exe?241+

ful+CHAP0452+pdf. 

1 Dissenting Statement of Comm’r Melissa 

Holyoak, Joined by Comm’r Andrew N. Ferguson, 

In the Matter of the Non-Compete Clause Rule, FTC 

Matter No. P201200, at 1 (June 28, 2024) (quoting 

U.S. Const. Art. I and W. Virginia v. EPA, 597 U.S. 

697, 737–38 (2022) (Gorsuch, J., concurring)) 

(cleaned up), https://www.ftc.gov/system/files/ftc_

gov/pdf/2024-6-28-commissioner-holyoak-nc.pdf. 

2 15 U.S.C. 57a. 

3Cf. Dissenting Statement of Comm’r Melissa 

Holyoak, Joined by Comm’r Andrew N. Ferguson, 

supra note 1, at 2 (‘‘My dissent should not, 

however, be interpreted to mean that I endorse all 

non-compete agreements. To the contrary, I would 

support the Commission’s prosecution of anticompetitive non-compete agreements, where the 

facts and law support such enforcement. That is 

why I am particularly disappointed that the 

Commission dedicated the Commission’s limited 

resources to a broad rulemaking that exceeds 

congressional authorization and will likely not 

survive legal challenge.’’) (citation omitted). 

4See, e.g., A New Way Forward for the Middle 

Class: A Plan to Lower Costs and Create an 

Opportunity Economy, KamalaHarris.com, at 33 

(Sept. 2024) (‘‘Under her leadership as Vice 

President, the Administration has launched a 

historic effort to crack down on junk fees and save 

consumers time and money. This includes [a rule] 

to . . . make it as easy to cancel a subscription as 

it is to subscribe. . . . A Harris-Walz 

Administration will . . . continue to take on the 

everyday hassles that waste Americans’ time and 

money, [including] subscriptions. . . .’’) (citing 

FTC press release), https://kamalaharris.com/wpcontent/uploads/2024/09/Policy-Book-EconomicOpportunity.pdf. 

5 15 U.S.C. 8401–8405. 

6 16 CFR part 310. 

7 12 CFR 1005.10. 

8 15 U.S.C. 57a. 

9See generally Dissenting Statement of Comm’r 

Melissa Holyoak, Joined by Comm’r Andrew N. 

Ferguson, supra note 1. 

1990s.2 The reason that the Commission 

declines to finalize this proposal is not that 

it lacks policy merit but that the record in 

total does not support its inclusion in the 

Final Rule as proposed.3 Of course, we are 

always mindful that our authority under the 

FTC Act to issue rules under section 18 has 

limits; sometimes, as here, those limits 

prevent us from codifying in a rule practices 

that we might, as a matter of policy, prefer 

to require explicitly. 

Congress and State legislatures, by 

contrast, have plenary authority to require 

such a reminder. This spring, for example, in 

a show of bipartisanship, Virginia Governor 

Glenn Youngkin signed into law legislation 

sponsored by Delegate Michelle Lopes 

Maldonado, H.B. 744, which requires that 

subscriptions that renew annually provide to 

the consumer a notice of the upcoming 

renewal and the opportunity to cancel via 

between 30 and 60 days before the consumer 

is charged for the renewal.4 The comment 

record compiled in this rulemaking 

proceeding strongly supports the wisdom of 

Federal and State legislators’ carefully 

considering adopting such a law, and the 

Final Rule’s omission of such a provision 

should be understood only as a reflection of 

the Commission’s cautious approach to its 

jurisdictional limits and not as related to the 

merits of a policy that requires annual 

reminders for subscription services. 

Dissenting Statement of Commissioner 

Melissa Holyoak 

‘‘Article I of the Constitution vests ‘all 

legislative Powers herein granted’ in 

Congress. ‘By vesting the lawmaking power 

in the people’s elected representatives, the 

Constitution sought to ensure not only that 

all power would be derived from the people, 

but also that those entrusted with it should 

be kept in dependence on the people.’ ’’ 1

Whenever we engage in rulemaking, the 

Commission should recall that Article I of the 

Constitution vests legislative powers in 

Congress, not with agencies. Because of that, 

it is elected officials that delineate the 

boundaries, and set the requirements, that we 

as Commissioners must adhere to. I believe 

the Commission exceeds those boundaries 

and requirements in amendments to the 

Negative Option Rule, 16 CFR part 425, 

(‘‘Rule’’) it finalizes today. Instead of 

pursuing targeted enforcement efforts or 

finalizing a rule consistent with the 

Commission’s authority under section 18 of 

the FTC Act,2 the Commission has used its 

limited resources to promulgate a broader 

regulation that may not survive legal 

challenge.3

The likely unlawful character of the rule is 

compounded by the Majority’s race to cross 

the finish line. Why the rush? There is a 

simple explanation. Less than a month from 

election day, the Chair is hurrying to finish 

a rule that follows through on a campaign 

pledge made by the Chair’s favored 

presidential candidate.4

The Majority votes today to approve a final 

trade regulation rule amendment to the 

existing negative option rule. This 

amendment greatly expands the prior rule, 

which had covered now-rare prenotification 

plans (e.g., book-of-the-month clubs)—and 

goes well beyond what existing laws, such as 

the Restore Online Shoppers’ Confidence Act 

(‘‘ROSCA’’),5 Telemarketing Sales Rule 

(‘‘TSR’’),6 or Regulation E,7 require. The nowcapacious Rule creates potential civil penalty 

liability for: any misrepresentation of 

material fact made in connection with the 

marketing of a product or service that has a 

negative option feature (§ 425.3); failure to 

disclose all material terms before obtaining 

billing information in connection with a 

negative option (§ 425.4); failure to obtain 

express informed consent before charging in 

connection with a negative option (§ 425.5); 

and failure to provide a simple mechanism 

for cancelling a negative option (§ 425.6). The 

Rule also preempts inconsistent State laws 

(§ 425.7). 

I respectfully dissent for three reasons. 

First, this rulemaking did not follow the FTC 

Act’s section 18 requirements for rulemaking 

because: (1) the Rule is much broader than 

the ‘‘area of inquiry’’ proposed by the 

advance notice of proposed rulemaking 

(‘‘ANPR’’); (2) the Rule fails to define with 

specificity acts or practices that are unfair or 

deceptive, improperly generalizing from 

narrow industry-specific complaints and 

evidence to the entire American economy; 

and (3) the Rule fails to demonstrate that the 

unfair or deceptive acts or practices related 

to negative option billing are ‘‘prevalent.’’ 8

Second, the Rule’s breadth incentivizes 

companies to avoid negative option features 

that honest businesses and consumers find 

valuable. Third, the Rule represents a missed 

opportunity to make useful amendments to 

the preexisting negative option rule within 

the scope of the Commission’s authority. 

Such amendments could have provided 

greater clarity to businesses about the 

patchwork of Federal laws pertaining to 

negative options and lawfully used our 

section 18 rulemaking authority to fill 

potential gaps including, for example, 

cancellation requirements. Indeed, I am very 

concerned that consumers are sometimes 

misled by companies using deceptive 

negative option features. The Rule represents 

a missed opportunity to devote scarce staff 

resources to bringing enforcement actions 

related to negative option features using the 

clear tools that Congress gave us, rather than 

conducting an overbroad rulemaking that 

cost years of staff time to propose and 

finalize, but will likely not survive legal 

challenge. 

Today’s rulemaking did not need to end 

this way. Had political leadership at the 

Commission taken more time to engage with 

other Commissioners to refine and improve 

the Rule, my vote and statement would look 

very different. Instead, less than a month 

from November 5, the Chair has put political 

expediency over getting things right. 

Unfortunately, pushing politically motivated 

rulemakings has not been the exception with 

the Majority.9 Today, I believe we are seeing 

another low in our abuse and misuse of the 

tools Congress has given us. Rather than 

engage in blatant electioneering to advance 

political ends, the Commission should have 


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Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 90541 

10Magnuson-Moss Warranty Act of 1975, Public 

Law 93–637, 88 Stat. 2183. 

11See J. Howard Beales III, The Fed. Trade 

Comm’n’s Use of Unfairness Authority: Its Rise, 

Fall, and Resurrection, 22 J. of Pub. Pol’y & Mktg. 

192, 193 (2003) (citing FTC Staff Report on 

Television Advertising to Children (Feb. 1978); 

Notice of Proposed Rulemaking on Television 

Advertising to Children, 43 FR 17967 (Apr. 27, 

1978)). In the 1970s, the Commission aggressively 

used its rulemaking authority—so aggressively that 

it has been called the ‘‘second most powerful 

legislature in America.’’ Timothy J. Muris, The 

Consumer Protection Mission: Guiding Principles 

and Future Direction, 51 Antitrust L.J. 625, 625 

(1982). The approach of today’s Majority threatens 

to turn back the clock to this earlier, ill-advised 

approach. 

12 Id. at 193. 

13 Id. 

14S. Rep. No. 96–500, at 3 (1979). 

15Federal Trade Commission Improvements Act 

of 1980, Public Law 96–252, 94 Stat. 374. 

16 Id. 

17 Jeffrey S. Lubbers, It’s Time To Remove the 

‘‘Mossified’’ Procedures for Removing FTC 

Rulemaking, 83 Geo. Wash. L. Rev. 1979, 1997 

(2015). 

18Press Release, Fed. Trade Comm’n, FTC Votes 

to Update Rulemaking Procedures, Sets Stage for 

Stronger Deterrence of Corporate Misconduct (July 

1, 2021), https://www.ftc.gov/news-events/news/ 

press-releases/2021/07/ftc-votes-updaterulemaking-procedures-sets-stage-strongerdeterrence-corporate-misconduct. 

19See Dissenting Statement of Comm’rs Christine 

S. Wilson and Noah Joshua Phillips, Regarding the 

Comm’n Statement On the Adoption of Revised 

Section 18 Rulemaking Procedures (July 9, 2021), 

https://www.ftc.gov/system/files/documents/ 

public_statements/1591702/p210100_

wilsonphillips_joint_statement_-_rules_of_

practice.pdf. 

20 Id. at 3–5. 

21 Id. at 3. 

22See generally Betsy Klein et al., Biden Cracks 

Down on ‘‘Junk Fees’’ in New Economic Focus 

Ahead of Midterms, CNN (Oct. 26, 2022), https:// 

www.cnn.com/2022/10/26/politics/biden-bank-feesspeech/index.html. 

23See, e.g., Biden-Harris Administration 

Announces Broad New Actions to Protect 

Consumers from Billions in Junk Fees, The White 

House (Oct. 11, 2023) (‘‘The FTC proposed a ‘click 

to cancel’ rule in March of 2023, that, if finalized 

as proposed, would require sellers to make it as 

easy for consumers to cancel their enrollment as it 

was to sign up. This rule would rescue consumers 

from seemingly never-ending struggles to cancel 

unwanted subscription payment plans for 

everything from cosmetics to gym memberships.’’), 

https://www.whitehouse.gov/briefing-room/ 

statements-releases/2023/10/11/biden-harrisadministration-announces-broad-new-actions-toprotect-consumers-from-billions-in-junk-fees/. 

24See, e.g., A New Way Forward, 

KamalaHarris.com, supra note 4. 

25See, e.g., President Biden (@POTUS), X.com 

(Aug. 12, 2024) (‘‘We’re making it easier to cancel 

subscriptions and memberships. You shouldn’t 

have to navigate a maze just to cancel unwanted 

subscriptions and recurring payments. The FTC is 

hard at work finalizing its ‘Click to Cancel’ rule that 

it proposed to make this process a requirement.’’), 

https://x.com/POTUS/status/ 

1823037212885414107; see also FACT SHEET: 

Biden-Harris Administration Launches New Effort 

to Crack Down on Everyday Headaches and Hassles 

That Waste Americans’ Time and Money, The 

White House (Aug. 12, 2024) (‘‘Today, President 

Biden and Vice President Harris are launching 

‘Time Is Money,’ a new governmentwide effort to 

crack down on all the ways that corporations . . . 

add unnecessary headaches and hassles to people’s 

days and degrade their quality of life. . . . The 

Federal Trade Commission (FTC) has proposed a 

rule that, if finalized as proposed, would require 

companies to make it as easy to cancel a 

subscription or service as it was to sign up for one. 

The agency is currently reviewing public comments 

about its proposal.’’), https://www.whitehouse.gov/ 

briefing-room/statements-releases/2024/08/12/factsheet-biden-harris-administration-launches-neweffort-to-crack-down-on-everyday-headaches-andhassles-that-waste-americans-time-and-money/. 

instead focused on stewarding its resources 

effectively and in ways that restore our 

institutional legitimacy, not further 

undermine it. 

I. The historical context surrounding 

Congress’s enactment of rulemaking 

requirements in section 18 of the FTC Act is 

important. Congress passed the MagnusonMoss Warranty Act in 1975, which imposed 

exacting requirements and limitations on 

rulemaking regarding unfair or deceptive acts 

or practices.10 In the 1970s, the Commission 

tried to use its rulemaking and unfairness 

authority aggressively—for example, ‘‘to ban 

all advertising directed to children on the 

grounds that it was ‘immoral, unscrupulous, 

and unethical’ and based on generalized 

public policies to protect children.’’ 11 In 

response, Congress refused to fund the 

Commission, shutting it down for several 

days.12 Even this harsh rebuff did not 

completely cool Congressional ire with the 

‘‘National Nanny’’ (as the Washington Post— 

no bastion of conservative thought— 

facetiously dubbed the Commission).13 A 

1979 Senate Report found that the agency’s 

rulemaking efforts were filled with 

‘‘excessive ambiguity, confusion, and 

uncertainty.’’ 14 In 1980, Congress legislated 

to limit the Commission’s authority, by 

imposing additional procedural obligations 

on section 18 rulemaking.15 Among other 

things, Congress created additional 

procedural rights, well beyond the 

Administrative Procedure Act’s baseline 

procedural requirements, such as requiring 

the FTC to issue an ANPR with numerous 

specific requirements, which the 

Commission must submit to Congress, for 

each rulemaking.16

Congress’ harsh reaction to the FTC’s 

overreach only makes sense if we understand 

that section 18 was created and then 

expanded not to give the Commission freeranging rulemaking authority, but to curb it. 

We should be exacting in following the 

requirements of section 18, lest we risk 

repeating history—drawing Congressional ire 

that that could further limit our authority and 

budget. Indeed, section 18’s rulemaking 

requirements, while demanding, are the 

means of assuring that we act within the 

parameters established by Congress. 

As an initial matter, this Rule’s procedural 

irregularities begin with how the Rule was 

finalized in a compressed time frame. Given 

the rigorous demands of section 18 

rulemaking, historically, it has taken the 

Commission, on average, 5.57 years to issue 

a rule after the Magnuson-Moss procedures 

were enacted.17 That, apparently, was too 

much time and procedure for the Majority. In 

2021, during the pendency of this 

rulemaking, the Commission made changes 

to its rules of practice,18 over objections from 

the Commissioners in the Minority, to limit 

the efficacy of section 18’s procedural 

safeguards and compress rulemaking 

timeframes.19 Among other things, the 

Commission revised the Rules of Practice so 

as to remove selection of the Presiding 

Officer from an independent judge and assign 

that role to the Chair; strip the Presiding 

Officer of significant control over the hearing 

process; and narrow opportunities for the 

public to help determine which factual issues 

are in dispute.20 Then-Commissioners 

Phillips and Wilson dissented, noting: ‘‘What 

the[se] changes—adopted without public 

input—in fact do is fast-track regulation at 

the expense of public input, objectivity, and 

a full evidentiary record.’’ 21

Apparently not content with even these 

procedural shortcuts and compressed 

timeframe, political leadership now speeds to 

the finish line with minimal opportunity for 

Commissioner engagement on the final Rule. 

There should be ample opportunity for 

robust consideration and dialogue leading up 

to a Commission vote on any regulation, and 

especially for a highly consequential rule. 

Such opportunity for dialogue may assuage 

concerns, produce constructive changes, and 

ultimately lead to a better result. Indeed, in 

the past where political leadership has been 

willing to engage and make needed 

modifications preceding votes, that 

consideration and engagement have been 

very valuable and led to bipartisan support 

for Commission actions. 

Here, however, the time period for me to 

review this economy-wide Rule was a matter 

of weeks. Those weeks were also packed with 

dozens of cases, one other rulemaking, and 

other policy matters. (Remarkably, the Chair 

had this draft final Rule for some time before 

it was circulated to the other 

Commissioners.) Reviewing the NPRM was 

no substitute for robust discussion and 

negotiation related to the final Rule’s 

language and statement of basis and purpose, 

as the final Rule differs in important ways 

from the rule as proposed. The push to 

finalize is inexcusable, particularly because it 

is a discretionary rulemaking with no due 

date (imposed by Congress or otherwise). For 

those tracking the Rule and national politics 

closely, this rush to the finish line (and less 

than a month from a Presidential election) is 

no surprise. This Rule is connected to the 

current administration’s efforts relating to socalled junk fees (which are beginning to 

make a regular appearance before 

elections 22), and it has been in the spotlight 

for some time, including at the White 

House 23 and now on the campaign trail.24

But elevating political goals comes at a 

high price, harms policy efforts that might 

otherwise benefit consumers, and 

undermines the Commission’s legitimacy. 

Publicly appearing to refuse to keep an open 

mind on a final rule or to prejudge complex 

policy questions, along with an apparent 

unwillingness to reconsider various aspects 

of a rulemaking may create PR buzz for the 

campaign trail and score political points. But 

that posture creates real legal risk for the 

Rule. Statements from the White House 25


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26See, e.g., Lina Khan (@linakhanFTC), X.com 

(Aug. 12, 2024) (‘‘As @POTUS notes, @FTC’s 

proposal would require that firms make it as easy 

to cancel a subscription as it is to sign up. Too often 

people have to jump through endless hoops—or end 

up stuck paying for services they don’t want. Our 

rule would end this tax on your time & money.’’), 

https://x.com/linakhanFTC/status/ 

1823094653962289640. That Tweet came in 

response to the President unequivocally saying, 

‘‘[w]e’re making it easier to cancel subscriptions 

and memberships,’’ and signaling the proposal 

would be finalized consistent with the NPRM. See 

President Biden (@POTUS), supra note 25. Other 

statements are similarly probative of apparent 

conclusions being reached about the contours of the 

final rule. See, e.g., Chair Lina M. Khan, Remarks 

at Center for American Progress, at 3–4 (Sept. 25, 

2024) (‘‘We’ve also unfortunately seen a rise in 

subscription traps. We’ve all been there. Every 

month, you’re paying for that gym membership you 

don’t really use, or streaming services you never 

signed up for in the first place. But it’s absurdly 

difficult to actually cancel these services. You have 

to call customer service and spend an hour on the 

phone with a bot before you finally get through to 

a human being. Customer Service then transfers you 

to Memberships. They transfer you to Cancellations. 

And then suddenly the call drops and you have to 

do it all over again. It can feel like you’re stuck in 

some type of endless doom loop. And many people 

understandably just give up—and pay dozens if not 

hundreds of dollars for subscriptions they don’t 

want or need. And of course, that’s kind of the 

point: to wear you down and keep taking your 

money, month after month. I’m excited that the 

Commission will be considering finalization of a 

‘click to cancel’ rule that would require companies 

to make it just as easy to cancel a subscription as 

it is to sign up for one.’’), https://www.ftc.gov/ 

system/files/ftc_gov/pdf/20240925-remarks-chairkhan-center-for-american-progress.pdf; see also 

Chair Lina M. Khan, Remarks at Strike Force on 

Unfair and Illegal Pricing Public Convening, at 2 

(Aug. 1, 2024) (‘‘We’re currently working toward 

finalizing our ‘click to cancel’ rule. Too often, 

businesses require people to jump through endless 

hoops just to cancel a subscription. Customers end 

up paying dozens if not hundreds of dollars a 

month in subscriptions they want to escape. Our 

proposed rule would require that companies make 

it as easy to cancel a subscription as it is to sign 

up for one—ending this tax on people’s time and 

money.’’), https://www.ftc.gov/system/files/ftc_gov/ 

pdf/2024.08.01-remarks-chair-khan-strike-forcepublic-convening.pdf. In light of such statements 

unambiguously reflecting a firm belief in the need 

for regulatory action—and all but committing to the 

proposed solution—it is risible to suggest this rule 

was not effectively baked well before the 

Commission’s vote. 

27See, e.g., Talmon Joseph Smith, Lina Khan 

Ends FTC Term. What’s Next for Her?, Seattle 

Times (Oct. 1, 2024) (‘‘Q: You’ve not gotten any 

whispers, any word that you will not be wanted in 

a Harris administration? A. No, I think to the 

contrary.’’), https://www.seattletimes.com/business/ 

lina-khan-ends-ftc-term-whats-next-for-her/; see 

generally Ben Brody, Lina Khan Hits the Road with 

Democrats Ahead of Election, Punchbowl News 

(Oct. 2, 2024), https://punchbowl.news/article/ 

campaigns/ftc-lina-khan-campaigns-withdemocrats/; cf. Letter from James Comer, Chair, 

Committee on Oversight and Accountability to Lina 

Khan, Chair, Fed. Trade Comm’n, at 1 (Oct. 8, 2024) 

(‘‘During this election season, you have engaged in 

partisan political activities with numerous 

Democrat congressional candidates, undermining 

the FTC’s independence and its mission to protect 

American consumers regardless of partisan 

affiliation’’), https://oversight.house.gov/wpcontent/uploads/2024/10/FTC-re-Chair-KhanCampaign-Season-Events_10.8.202423.pdf. 

28See generally 15 U.S.C. 57a(b)(1); 5 U.S.C. 

553(c); cf. Air Transport Ass’n of Am. Inc. v. Nat’ 

Mediation Bd., 663 F.3d 476 (D.C. Cir. 2011); Int’l 

Snowmobile Mfrs. Ass’n v. Norton, 340 F. Supp. 2d 

1249 (D. Wyo. 2004); Nehemiah Corp. of Am. v. 

Jackson, 546 F. Supp. 2d 830 (E.D. Cal. 2008). The 

Chair’s approach is highly unusual, given this legal 

risk and the Commission’s responsibility to keep an 

open mind—which is why, typically, 

Commissioners do not comment on pending 

rulemakings. 

29 15 U.S.C. 57a(b)(2)(A). 

30Fed. Trade Comm’n, Press Release, FTC Seeks 

Public Comment on Ways to Improve Current 

Requirements for Negative Option Marketing (Sept. 

25, 2019), https://www.ftc.gov/news-events/news/ 

press-releases/2019/09/ftc-seeks-public-commentways-improve-current-requirements-negativeoption-marketing. 

31 84 FR 52393, 52394 (Oct. 2, 2019) (‘‘The 

Commission seeks comments on ways to improve 

its existing regulations for negative option 

marketing, a common form of marketing where the 

absence of affirmative consumer action constitutes 

assent to be charged for goods or services. Negative 

option offers are widespread in the marketplace and 

can provide substantial benefits for sellers and 

consumers. However, consumers cannot reap such 

benefits when marketers fail to make adequate 

disclosures, bill consumers without their consent, 

or make cancellation difficult or impossible. Over 

the years, such problematic negative option 

practices have remained a persistent source of 

consumer harm, often saddling consumers with 

recurring payments for products and programs they 

did not intend to purchase or did not want. In the 

past, the Commission has sought to address such 

practices through individual law enforcement cases 

and a patchwork of regulations. Nevertheless, 

problems persist, and consumers continue to 

submit thousands of complaints to the FTC each 

year about negative option marketing. To address 

these concerns, the Commission seeks comments on 

ways to improve existing regulatory requirements, 

including whether it should use its rulemaking 

authority under the FTC Act to expand the scope 

and coverage of the existing Negative Option 

Rule.’’). 

32 Id. at 52395. 

33 Id. at 52396. 

34Fed. Trade Comm’n, Press Release, FTC To 

Ramp Up Enforcement Against Illegal Dark Patterns 

that Trick or Trap Consumers Into Subscriptions 

(Oct. 28, 2021), https://www.ftc.gov/news-events/ 

news/press-releases/2021/10/ftc-ramp-enforcementagainst-illegal-dark-patterns-trick-or-trapconsumers-subscriptions. 

35Fed. Trade Comm’n, Press Release, Federal 

Trade Comm’n Proposes Rule Provision Making It 

Easier for Consumers to ‘‘Click to Cancel’’ Recurring 

Subscriptions and Memberships (Mar. 23, 2023), 

https://www.ftc.gov/news-events/news/pressreleases/2023/03/federal-trade-commissionproposes-rule-provision-making-it-easierconsumers-click-cancel-recurring. 

36 Dissenting Statement of Comm’r Christine S. 

Wilson, Notice of Proposed Rulemaking, Negative 

Option Rule, at 3 (Mar. 23, 2023), https://

www.ftc.gov/system/files/ftc_gov/pdf/p064202_

commissioner_wilson_dissent_negative_option_

rule_finalrevd_0.pdf. 

and related statements from the Chair 26

concerning this rule—and other matters 

related to her tenure or connected to her 

party’s campaign efforts 27—raise the 

possibility that foreordained outcomes and 

political goals curtailed considering the 

rulemaking record with an open mind and 

without prejudgment, as law requires.28

Today’s sprint to the finish line has 

shortchanged the kind of deliberation and 

thoughtful engagement Congress deemed 

appropriate when it established rulemaking 

requirements under the Magnuson-Moss Act. 

In addition to my concern about these 

irregularities, I am convinced that this 

rulemaking has failed to satisfy section 18’s 

requirements for rulemaking in three ways. 

First, the Commission is issuing a broad final 

rule even though the ANPR was far narrower. 

This mismatch means that the Commission 

failed to provide in its ANPR the ‘‘brief 

description of the area of inquiry under 

consideration, the objectives which the 

Commission seeks to achieve, and possible 

regulatory alternatives under consideration 

by the Commission’’ that section 18 

requires.29 The mismatch is the result of 

leadership changes and priorities. The ANPR 

was voted out in 2019 by a bipartisan 

Commission under then-Chair Joseph J. 

Simons.30 It sought public comments about 

centralizing existing legal requirements 

regarding negative options and filling gaps 

via section 18 rulemaking related to 

disclosures, consent, and cancellation.31 The 

current Majority took the bipartisan ANPR 

and politically supercharged it. 

Importantly, the ANPR did not 

contemplate broader regulation prohibiting 

all misrepresentations of material fact related 

to products that have negative option 

features. The ANPR tailored its inquiry by 

‘‘. . . highlighting five basic section 5 

requirements that negative option marketing 

must follow to avoid deception’’: (1) 

disclosure of material terms of a negative 

option offer; (2) clear and conspicuous 

disclosures; (3) pre-purchase disclosures; (4) 

consent; (5) cancellation.32 Absent from this 

list is anything about prohibiting all 

misrepresentations of material fact related to 

any product that happens to have a negative 

option feature. Similarly, when the ANPR 

stated that the Commission was seeking 

comment ‘‘to reduce consumer harm created 

by deceptive or unfair negative option 

marketing,’’ it specified the Commission’s 

interest pertained to ‘‘disclosures, consumer 

consent, and cancellation.’’ 33 Again, absent 

from that list was anything about prohibiting 

all misrepresentations of material fact related 

to marketing of any product that has a 

negative option feature. 

When Commission leadership changed in 

2021, the ‘‘area of inquiry’’ changed as well. 

Almost immediately, the Commission under 

Chair Khan disrupted this particular 

rulemaking process to issue an Enforcement 

Policy Statement Regarding Negative Option 

Marketing 34—sub-regulatory guidance on the 

very same topic as the rulemaking itself. The 

Commission then issued a Notice of 

Proposed Rulemaking (‘‘NPRM’’) in 2023 that 

introduced into the rulemaking—for the first 

time—the notion of prohibiting 

misrepresentations related to marketing of 

products with negative option features.35

Former Commissioner Christine S. Wilson 

dissented from the issuance of the NPRM for 

this (among other) reasons. In her dissenting 

statement, Commissioner Wilson explained: 

‘‘Importantly, we did not seek comment in 

the ANPR about whether an expanded 

negative option rule should address general 

misrepresentations; no comments are cited in 

the NPRM to support the inclusion of these 

provisions.’’ 36


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37SBP at 37–38. 

38 15 U.S.C. 57a(b)(2)(A)(ii). 

39See Regulations.gov, Negative Option Rule 

(ANPR), FTC–2019–0082, https://

www.regulations.gov/docket/FTC-2019-0082. 

40The Commission published 1,162 unique 

comments. SBP at 18. See Regulations.gov, Negative 

Option Rule (NPRM), FTC–2023–0033–0001, 

https://www.regulations.gov/document/FTC-2023- 

0033-0001. 

41 15 U.S.C. 57a(b)(2)(A) (‘‘Prior to the publication 

of any notice of proposed rulemaking pursuant to 

paragraph (1)(A), the Commission shall publish an 

advance notice of proposed rulemaking in the 

Federal Register.’’). 

42Cf. Dissenting Statement of Comm’r Andrew N. 

Ferguson, Joined by Comm’r Melissa Holyoak, In re 

Non-Compete Clause Rule, FTC Matter No. 

P201200, at 20–22 (June 28, 2024), https://

www.ftc.gov/system/files/ftc_gov/pdf/fergusonnoncompete-dissent.pdf (describing nondelegation 

doctrine). 

43 15 U.S.C. 57a(a)(1)(B). 

44S. Rep. No. 93–1408 at 7702, 7755, 7763 (1974) 

(Conf. Rep.). 

45 15 U.S.C. 45(n). 

46Cf. Katharine Gibbs School (Inc.) v. FTC, 612 

F.2d 658, 661–62 (2d Cir. 1979) (setting aside FTC 

rule under section 18 that did not, among other 

things, define unfair practices with sufficient 

specificity). 

47See, e.g., id. at 663 (‘‘When Congress provided 

that the Commission’s rules must define unfair and 

deceptive acts with specificity, it clearly intended 

that the Commission’s definition would be subject 

to judicial review.’’). 

48AMG Capital Mgmt., LLC v. FTC, 593 U.S. 67, 

70 (2021). 

49 15 U.S.C. 57b(a)(1). 

50 Id. 57a(b)(3). 

51 Id. 

52SBP at 8. 

53See Clark v. Martinez, 543 U.S. 371, 381 (2005) 

(describing the canon of constitutional avoidance as 

‘‘resting on the reasonable presumption that 

Congress did not intend the alternative which raises 

serious constitutional doubts’’); see also Adrian 

Vermeule, Saving Constructions, 85 Geo. L. J. 1945, 

1949 (1997) (providing examples of cases in which 

the Supreme Court construed a statute so as to 

avoid a constitutional question). 

The Statement of Basis and Purpose 

(‘‘SBP’’) accompanying the final Rule 

cursorily dismisses concerns about the 

ANPR’s adequacy, dubiously arguing that 

section 18 requires no such ‘‘specificity’’ in 

describing the area of inquiry.37 But the 

whole purpose of section 18’s requirement of 

a description of what the Commission aims 

to do is to elicit public comment to inform 

the Commission about its choices. Indeed, 

section 18 requires an ANPR to invite 

interested parties to provide ‘‘suggestions or 

alternative methods for achieving such 

objectives.’’ 38 Parties cannot possibly 

include alternative methods if the ANPR 

wholly fails to identify the objective, i.e., 

regulating misrepresentations in marketing of 

products with negative option features. 

It is telling that the ANPR here only 

elicited 17 comments,39 while the NPRM 

(which made clear that the Commission was 

significantly expanding its focus) elicited 

16,000 comments.40 The narrowness of the 

ANPR meant the Commission could not, 

consistent with section 18, proceed to a 

much broader NPRM.41 In choosing to 

interpret the ANPR (and the 17 comments it 

elicited) as sufficient predicate for the muchexpanded NPRM, the Commission cut itself 

off from valuable public comments at 

important early stages (especially as to 

regulatory alternatives) and ignored the 

rulemaking guardrails that Congress carefully 

established to forestall nondelegation 

concerns that might otherwise exist.42

The second procedural failing lies in the 

Commission’s failure to ‘‘prescribe . . . rules 

which define with specificity acts or 

practices which are unfair or deceptive acts 

or practices’’ as Section 18 requires.43

‘‘Because the prohibitions of section 5 of the 

Act are quite broad, trade regulation rules are 

needed to define with specificity conduct 

that violates the statute and to establish 

requirements to prevent unlawful 

conduct.’’ 44 Section 425.3 of the Rule fails 

Section 18’s specificity requirements. Section 

425.3 prohibits any misrepresentation of 

material fact made in connection with the 

sale or promotion of a product that has a 

negative option feature. 

Unfairness explicitly requires a cost-benefit 

analysis relating to the practices at issue.45

Meanwhile, deception is a subset of the 

broader unfairness authority. With its focus 

on reasonableness and materiality, no costbenefit analysis is required because the 

Commission has historically argued that 

deceptive practices are always harmful. So 

far, so good. But both unfairness, and 

particularly deception, require the 

Commission to provide sufficient evidence 

for a reviewing court to evaluate whether the 

Commission has met the legal predicate for 

either theory (particularly as it relates to 

reasonableness and materiality). While the 

Rule provides examples of material 

misrepresentations, those are merely 

examples. Indeed, the Commission ignores 

the specificity requirement by generalizing 

from poorly sampled past agency cases. 

Whatever the merits of the past cases, the 

Majority does not remotely come close to 

explaining how the evidence in those limited 

cases is similar to the myriad contexts an 

economy-wide rule would inevitably apply 

to. 

Indeed, the Rule is not limited to 

misrepresentations relating to deceptive 

terms of negative option features (or some 

other specific, deceptive conduct), but 

instead, applies broadly to any material fact. 

Nor does the Rule require that the consumer 

actually use the negative option feature; the 

mere presence of a negative option feature 

would render any misrepresentation of 

material fact subject to the Rule. Taken 

together, the Rule is nothing more than a 

back-door effort at obtaining civil penalties in 

any industry where negative option is a 

method to secure payment. The Rule’s 

application to any misrepresentation 

therefore fails to meet Section 18’s 

‘‘specificity’’ requirement,46 and will no 

doubt invite serious legal challenge on this 

basis.47

The Supreme Court’s decision in AMG, 

which held the language of Section 13(b) 

does not authorize the Commission to obtain 

equitable monetary relief,48 limited the 

Commission’s ability to seek money for firsttime violations of the FTC Act. The 

Commission is still able, however, to seek 

monetary remedies for violation of rules 

issued under Section 18.49 Here, the Final 

Rule effectively transforms Section 5’s broad 

prohibition on unfair or deceptive practices 

into a Section 18 rule, allowing the 

Commission to expand its ability to seek 

money. Indeed, because negative option 

features are widely used in a variety of 

industries, the Rule greatly expands that 

ability. While I generally support legislation 

that would grant the FTC authority under 

Section 13(b) to obtain court orders for 

redress or disgorgement (with whatever 

guardrails Congress deems fit), the 

Commission should not circumvent 

legislative prerogative via improper Section 

18 rulemaking. 

The third significant procedural flaw in 

this rulemaking is that the Commission failed 

to appropriately establish the ‘‘prevalence’’ of 

unfair and deceptive practices related to all 

negative option features for all products in all 

markets and all media (i.e., with respect to 

the scope of this rule). According to Section 

18, the Commission may issue an NPRM 

‘‘only where it has reason to believe that the 

unfair or deceptive acts or practices which 

are the subject of the proposed rulemaking 

are prevalent.’’ 50 Section 18 further provides: 

The Commission shall make a 

determination that unfair or deceptive acts or 

practices are prevalent under this paragraph 

only if— 

(A) it has issued cease and desist orders 

regarding such acts or practices, or 

(B) any other information available to the 

Commission indicates a widespread pattern 

of unfair or deceptive acts or practices.51

In the SBP, the Commission argues that it 

has satisfied this standard for its economywide rulemaking because it has issued more 

than 35 cases ‘‘challenging harmful negative 

option practices’’ and has received ‘‘tens of 

thousands of consumers complaints.’’ 52 This 

evidence may well suggest that some unfair 

and deceptive acts related to negative option 

offers are indeed prevalent. But these 

statistics do not establish prevalence of 

misrepresentations of material fact related to 

products with negative option features, any 

more than the number of FTC cases and 

consumer complaints involving the internet 

means that the entire internet should be the 

subject of a Section 18 rulemaking 

prohibiting misrepresentations. 

If similarity among complaints and cases 

only at the highest level of generality 

constitutes the ‘‘prevalence’’ sufficient to 

ground an economy-wide rulemaking, then a 

‘‘prevalence’’ determination is in fact no 

meaningful guardrail on the Commission’s 

conduct at all, creating precisely the type of 

non-delegation concerns that Section 18’s 

guardrails were meant to prevent. Canons of 

‘‘avoidance’’ warn us to avoid adopting 

interpretations that would render statutes 

unconstitutional.53 To avoid precisely that 

fate, ‘‘prevalence’’ must require more than 

what the Commission has shown here. 

A final concern here. The Rule’s failure to 

define with specificity the acts or practices 

which are unfair or deceptive, combined 

with the rule’s preemption of inconsistent 


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54 16 CFR 425.7(a) (‘‘Relation to State Laws’’) (‘‘In 

General. This part shall not be construed as 

superseding, altering, or affecting any State statute, 

regulation, order, or interpretation relating to 

negative option requirements, except to the extent 

it is inconsistent with the provisions of this part, 

and then only to the extent of the inconsistency.’’). 

55See Katharine Gibbs School, 612 F.2d at 667. 

56See, e.g., SBP at 145–46, 214. 

57Cf. Statement of Comm’r Christine S. Wilson 

Concurring In Part and Dissenting In Part, FTC v. 

Neurometrix, Inc., FTC Matter No. 1723130 (Feb. 

28, 2020), (disagreeing with the majority of the 

Commission on claim interpretation and 

substantiation for certain claims), https://

www.ftc.gov/system/files/ftc_gov/pdf/2024.08.01- 

remarks-chair-khan-strike-force-publicconvening.pdf. 

58Some businesses were already subject to 

disclosure requirements under existing laws such as 

ROSCA and the TSR. But those laws are more 

limited. For example, ROSCA section 8403 states 

that for goods or services sold through a negative 

option feature, the seller must ‘‘clearly and 

conspicuously disclose all material terms of the 

transaction before obtaining the consumer’s billing 

information.’’ 15 U.S.C. 8403. 

59Concurring and Dissenting Statement of 

Comm’r Melissa Holyoak, Social Media and Video 

Streaming Services Staff Report, FTC Matter No. 

P205402, at 18–19 (Sept. 19, 2024) (‘‘The core of 

this agency’s mission is to protect consumers. 

Unfortunately, recent years have seen some 

Commissioners take a narrow view of that mission 

and where harms emanate from . . . . [W]e should 

also protect the American people from harms that 

follow when we fail to robustly and 

comprehensively scrutinize our own policy efforts 

and advocacy, including for economic effects, and 

to anticipate potential unintended consequence.’’), 

https://www.ftc.gov/system/files/ftc_gov/pdf/ 

commissioner-holyoak-statement-social-media6b.pdf; cf. Dissenting Statement of Comm’r Melissa 

Holyoak, Joined by Comm’r Andrew N. Ferguson, 

In re Rytr, LLC, FTC Matter No. 2323052, at 5 (Sept. 

25, 2024) (‘‘We must protect consumers through 

robust enforcement. Indeed, the Commission is at 

its best when it does so. But we must also think 

carefully about the potential harms to consumers 

and innovation that attend misguided enforcement. 

Today’s misguided complaint and its erroneous 

application of section 5 will likely undermine 

innovation in the AI space. I therefore respectfully 

dissent.’’), https://www.ftc.gov/system/files/ftc_gov/ 

pdf/holyoak-rytr-statement.pdf. 

60 16 CFR 1.25, 1.31. 

61 16 CFR 425.8. 

62 Id. 

63To be clear, my concern is not with the 

exemption process itself (or its inclusion in the 

Rule), but with the enormous work it must do to 

compensate for the overbreadth of the provision 

regarding misrepresentations. 

64See, e.g., SBP at 171 (‘‘Notwithstanding 

IHRSA’s assertion that many fitness clubs offer 

online cancellation, at least 25 individual 

consumers submitted comments attesting to the 

difficulties of canceling gym memberships.’’). 

65 Id. at 173 (‘‘Based on these comments, the 

Commission makes the simplifying assumption that 

the worst gym membership cancellation 

experiences involve three failed attempts at 

cancellation, each costing one hour of time, and 

that, because of those cancellation failures, three 

unwanted monthly charges were processed.’’); see 

id. at 169–70 (explaining how, in its economic 

analysis for the Rule, ‘‘the Commission proxies the 

per-cancellation benefits of an additional, remote, 

method of cancellation by looking at those benefits 

in the context of gym memberships’’). 

66See id. at 171. 

State laws,54 seems likely to create confusion 

and, ultimately, may harm consumers. The 

Second Circuit rebuked the Commission for 

a similar approach in a prior rulemaking after 

the Commission had ‘‘fail[ed] . . . to define 

with specificity the acts or practices which 

are unfair or deceptive.’’ 55 Absent ‘‘a 

specification of the acts or practices which 

the Commission deems deceptive,’’ the Court 

explained that ‘‘the breadth of the 

preemption provision is such that it places in 

issue an indefinite variety of [S]tate laws and 

regulations’’ that were relevant to the 

underlying contractual relationships. 

Similarly, here, State laws govern the types 

of conduct today’s Rule attempts to 

regulate.56 One risk of misguided Federal 

regulation is that it can confuse or jeopardize 

State laws and enforcement. Given the Rule’s 

lack of specificity, it raises that concern. 

II. The Rule is troubling not only 

procedurally but also substantively. By 

singling out representations made in 

connection with negative option billing 

models and subjecting these representations 

to civil penalties or other monetary relief, it 

tilts the playing field in ways that are likely 

to pervert business incentives. For example, 

businesses may avoid using negative option 

billing models, even when businesses and 

consumers could derive significant value 

from them. 

One might argue that no shift in incentives 

will happen for honest businesses because 

the Rule only addresses misrepresentations 

of material fact. In other words, all an honest 

business needs to do to avoid civil penalties 

is to tell the truth about products and 

services that involve negative option billing. 

But what constitutes a misrepresentation can 

sometimes be in the eye of the beholder (that 

is, a Commissioner).57 Even honest 

businesses will have reason to reconsider the 

use of negative option billing now that it 

means subjecting themselves to potential 

civil penalties for misreading Commission 

tea leaves.58 And businesses will also need 

to factor in the compliance costs associated 

with implementing this Rule’s disclosure, 

consent, and cancellation requirements— 

prescriptive requirements that are absent for 

other billing models or less prescriptive 

under existing law, such as ROSCA. 

These shifting incentives matter to 

consumers because the reason that honest 

businesses adopt negative option billing is to 

lower transaction costs between consumers 

and firms. For example, say I want to watch 

a particular streaming service at my 

convenience. I don’t want to be bothered 

with signing up and paying a fee each month 

that I log on; I want negative option billing— 

a subscription—to reduce the friction in my 

streaming experience. Raising the transaction 

costs will reduce a business’s sales and the 

utility consumers derive from these services. 

In other words, in our good intentions, we 

may harm the consumers and competition we 

are supposed to protect.59

The Rule purports to address any 

overbreadth by including, consistent with the 

Commission’s Rules of Practice,60 an 

‘‘Exemptions’’ provision, which provides: 

‘‘Any person to whom this Rule applies may 

petition the Commission for a partial or full 

exemption.’’ 61 In response to such petition, 

‘‘[t]he Commission may . . . issue partial or 

full exemptions from this part if the 

Commission finds application of the Rule’s 

requirements is not necessary to prevent the 

acts or practices to which the Rule relates.’’ 62

But the ‘‘Exemptions’’ provision does 

nothing to reduce the burden on firms from 

the overbreadth of the Rule’s coverage of all 

misrepresentations of material fact. Rather, 

taken together, they effectively shift the 

burden of crafting a tailored rule to regulated 

entities. And, once again, it appears that the 

Commission is tilting the playing field in a 

manner that is likely to harm both consumers 

and competition. Small businesses and new 

market entrants are less likely to be able to 

afford the potentially costly legal fees needed 

to petition the Commission to obtain an 

exemption. Even for businesses that can 

afford to use the exemption process, this 

process will impose costs on businesses, who 

will pass on those costs to consumers. 

Raising potential costs for consumers through 

an improperly promulgated rule is not a 

desirable outcome at any time, but especially 

not in an inflationary economy. Businesses 

and consumers will not be alone in bearing 

increased costs. Conducting the exemption 

process will continue to drain FTC staff 

resources—reducing the time that our 

talented staff could devote to enforcing the 

clear authorities Congress has given us, such 

as ROSCA.63

A final point here. I also have concerns 

about the Commission’s economic analysis of 

the quantifiable benefits that may result from 

the Rule’s substantive requirements. For 

example, the Commission’s estimate related 

to the upper bound of the Rule’s benefits for 

consumers who cancel subscriptions with inperson enrollment is based in part on the 

complaints of 25 individual consumers in a 

single industry,64 and a number of other 

simplifying assumptions.65 But this selfselected group of 25 consumers does not 

comprise a random sample, even among 

people who were not able to cancel 

subscriptions with in-person enrollment on 

their first attempt.66 It is at least possible that 

other individuals who cancelled 

subscriptions in person had different 

experiences or expectations than these 

particular consumers—and therefore did not 

voice any complaint. Indeed, given that 

consumer experiences and expectations may 

vary significantly across industries and 

products, there is no reason to believe that 

balancing of harms and benefits of these 

consumers can be appropriately extrapolated 

to the entire economy. Thus, the 

Commission’s estimated benefits are not 

based on what could be characterized as a 

representative sample. Without knowing the 

frequency of consumers having significant 

difficulty cancelling in-person subscriptions, 

it is not possible to assess how much weight 

to place on the estimate of the high end of 

the range of benefits from the proposed rule. 

Most of the difference between the low-end 

and high-end estimates of benefits is driven 

by the estimate of the high end of the benefits 

for in-person subscriptions. 

III. This Rule is particularly disappointing 

because it represents two missed 

opportunities. In 2019, a bipartisan 

Commission unanimously voted in favor of 


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Federal Register / Vol. 89, No. 221 / Friday, November 15, 2024 / Rules and Regulations 90545 

67 84 FR 52393, 52394. 

68 FTC v. NGL Labs, LLC, No. 2:24–cv–5753 (C.D. 

Cal.), https://www.ftc.gov/legal-library/browse/ 

cases-proceedings/ngl. 69 FTC v. Care.com, Inc., No. 1:24–cv–987 (W.D. 

Tex.), https://www.ftc.gov/legal-library/browse/ 

cases-proceedings/carecom-inc-ftc-v. 70 FTC v. Legion Media LLC, FTC Matter No. 

2423034, https://www.ftc.gov/legal-library/browse/ 

cases-proceedings/242-3034-legion-media-llc-et-alftc-v. 71 FTC v. Career Step, LLC, FTC Matter No. 

2323019, https://www.ftc.gov/legal-library/browse/ 

cases-proceedings/232-3019-career-step-llc-ftc-v. 72 FTC v. NRRM, LLC, FTC Matter No. 2223031, 

https://www.ftc.gov/legal-library/browse/casesproceedings/2223031-carshield. 73 FTC v. Panda Benefit Servs., LLC, FTC Matter 

No. 2423041, https://www.ftc.gov/legal-library/ 

browse/cases-proceedings/2423041-panda-benefitservices-llc-ftc-v. 

74Prepared Statement of Comm’r Melissa 

Holyoak, Fed. Trade Comm’n, Before the Subcomm. 

on Innovation, Data, and Commerce of the Energy 

and Commerce Comm., U.S. House of 

Representatives, Concerning ‘‘The Fiscal Year 2025 

Federal Trade Commission Budget,’’ at 2–4 (July 9, 

2024), https://www.ftc.gov/system/files/ftc_gov/pdf/ 

commissioner-holyoak-testimony-7-5-24.pdf. 

75 Id. 

issuing the ANPR, which was intended to (1) 

consolidate the requirements from various 

laws the FTC enforces, providing businesses 

who have to navigate this patchwork with 

greater clarity, thereby benefiting both 

consumers and businesses; and (2) explore 

whether a Section 18 rule should fill any 

gaps ‘‘when marketers fail to make adequate 

disclosures, bill consumers without their 

consent, or make cancellation difficult or 

impossible.’’ 67 Today’s final Rule could have 

stayed that prudent course rather than 

expanding in scope and complexity as it has 

under this Commission. 

The second missed opportunity has taken 

place every day since the Commission 

expanded the scope of the rulemaking. This 

Commission chose to devote scarce staff 

resources to this overbroad rulemaking—one 

that seems likely to be challenged in court, 

which will lead to even more taxpayerfunded expenses—rather than direct our 

talented staff to draft a rule within the scope 

of our authority or bring enforcement actions 

using clear legal authorities like ROSCA and 

TSR. In my time at the Commission, I have 

voted in support of numerous ROSCA cases, 

including NGL,68 Care.com,69 and Legion 

Media,70 and numerous TSR cases, including 

Career Step,71 Carshield,72 and Panda Benefit 

Services.73 As I have said elsewhere, I believe 

the Commission is at its best when it focuses 

on enforcing the law, not writing it.74 But I 

am not reflexively opposed to rulemaking 

where Congress has delegated the 

Commission relevant authority and we act 

consistent with that authority.75

Unfortunately, that is not what today’s Rule 

is. Instead, we have an ill-disguised political 

maneuver from the Majority in the form of a 

rule, one rushed to publication to advance 

the prospects of the Chair’s preferred 

presidential candidate. 

I dissent. 

[FR Doc. 2024–25534 Filed 11–14–24; 8:45 am] 

BILLING CODE 6750–01–P 


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