FTC Releases Guidance on Negative Option Marketing
The Federal Trade Commission released a new enforcement policy statement on October 28, 2021, targeting the practice known as “Negative Option Marketing.” Negative Option Marketing is the practice of taking consumers’ silence as tacit consent in various circumstances, including automatic subscription renewals and free-trial marketing. In the statement, the FTC outlined four general requirements for companies soliciting consumer consent:
Sellers must give “clear and conspicuous disclosure” of the terms of the policy or offer, key terms such as the company’s intent to use silence as consent, the offer’s total cost, and how to cancel or withdraw consent.
Sellers must disclose these terms before soliciting consumer consent.
Sellers must obtain customers’ express informed consent.
Sellers must not impose “unreasonable” barriers to cancellation or withdrawal of consent.
This new policy could be a sign that the FTC will begin cracking down on so-called “dark patterns,” wherein companies use dishonest means to trick customers into signing up for services or agreeing to policies. While sellers taking advantage of unsophisticated customers is not a new phenomenon, dense terms of service agreements and complex software installation processes pose an additional risk to consumers in the digital marketplace. Additionally, this policy may signal a new willingness to sanction related practices such as pre-checking boxes in software installation wizards to install unwanted bloatware in conjunction with the desired software. Sellers may wish to consider examining their opt-out forms and get out ahead of this next wave of enforcement actions.
This post was co-authored by Blair Robinson, legal intern at Robinson+Cole. Blair is not yet admitted to practice law.