On October 16, 2024, the Federal Trade Commission (FTC) released a new trade regulation rule entitled “Rule Concerning Recurring Subscriptions and Other Negative Option Programs” (the Rule), which will fully replace the existing “Use of Prenotification Negative Option Plans” rule.  The Rule broadens disclosure, consent, cancellation, and documentation requirements for programs with any type of ‘negative option feature’ (such as automatic renewals, continuity plans, free-to-pay or fee-to-pay conversion offers, or pre-notification negative option plans). 

Among other things, under the Rule, sellers must disclose all material terms about a negative option plan prior to obtaining a consumer’s billing information.  The consumer must provide express informed consent to the negative option feature and the required disclosures must be in close proximity to the method of consent. 

Additionally, sellers must offer a simple method of cancelling the negative option feature in the same consent medium that is at least as easy as the original method of consent, also referred to as the “click-to-cancel” provision.

The Rule goes into effect 60 days after publication in the Federal Register, except the new disclosure, consent, and cancellation requirements, which go into effect 180 days after publication.  For a more in-depth look at the Rule, please visit reedsmith.com.