By Jimmy Asa
A few months ago, I was duped by a business that auto-billed me for something I never wanted or realized I had signed-up to receive. If it could happen to me, then it could happen to you.
When you buy something with a feature that provides continuing service or regular product shipments unless you cancel, that’s a negative option sale. If you haven’t heard the term “negative option” before, you’re not alone. This sales tactic is called a “negative” option because, unless you specifically opt-out of the additional purchase, the seller automatically takes your lack of a response to mean that you want to keep buying their product or some additional service, sometimes indefinitely. Consumers have unknowingly made these payments for months or years at a time and lost hundreds or thousands of dollars.
According to the Federal Trade Commission, there are four types of negative options:
In some cases, businesses will make this enrollment clear. However, very often this information will be hidden deep in the fine print or omitted altogether.
Businesses have been fined millions of dollars by FTC for these potentially deceptive advertising practices. According to FTC’s .com Disclosures: “A disclosure that is buried in a long paragraph of unrelated text will not be effective. Even though the unrelated information may be useful, advertisers must ensure that the disclosure is communicated effectively.”
Additionally, the “Restore Online Shopper’s Confidence Act” (ROSCA), lays out new rules that may make these types of sales illegal unless certain disclosures are met.
According to a recent FTC blog post, businesses must clearly and conspicuously disclose any terms or conditions before they take your billing information, they must receive customers’ implicit consent before auto-billing their account, and there must be simple methods by which consumers can opt-out of continued charges.
The BBB Code of Advertising states that “An advertisement as a whole may be misleading although every sentence separately considered is literally true. Misrepresentation may result not only from direct statements but by omitting or obscuring a material fact.”
BBB offers the following tips:
Reproduced with permission from the Better Business Bureau – July 2014 Bulletin