The Federal Trade Commission’s (FTC) Notice of Proposed Rulemaking, Negative Option Rule (“Rule”), which proposes to substantially amend the existing Negative Option Rule and set higher standards for autorenewal promotions and sales than under existing federal or state laws and regulations, was published in the Federal Register on April 21, 2023, setting the clock ticking on the 60-day public comment period. If promulgated, the revised Rule will apply to many more businesses and scenarios than are currently subject to autorenewal regulation. As we previously covered here, the proposed Rule would cover all forms of so-called “negative option” marketing and sales in all media, including negative options sold in a business-to-business (B2B) context (think about autorenewal terms in business services contracts), for month-to-month auto-renewing terms (think about “no contract” cell, Internet, media or entertainment services, and even auto-renewing monthly residential and commercial real estate tenancies) and for both the sale of goods and services. Other notable additions to the Rule include enhanced disclosure, consent, and cancellation requirements, as well as a powerful misrepresentation prohibition and annual reminders.
Written comments must be submitted to the FTC on or before June 23, 2023. We are currently working with clients and their trade organization to consider making public comments and to assess the impact on their business practices. For more information, please contact the authors or your usual point of contact at Squire Patton Boggs.
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