Negative option billing is an especially insidious way to make people keep buying things from you, and it’s an especially big problem online. Most products promising a “free trial” use it, and the method sells products like credit monitoring, college financial aid help, skin care products, weight loss supplements and shoes. Canceling these subscriptions can be a huge hassle, and wouldn’t it be easier if opt-out subscriptions just weren’t a thing?
Reps. Mark Takano (CA) and Sanford Bishop (GA) are the co-sponsors of a House bill [PDF] that was introduced today and may not actually go anywhere, but that makes us feel better that at least two lawmakers care about consumers stuck in recurring transactions that they thought they had never asked for.
“Through negative option billing, companies take millions of dollars every year from consumers who are not aware they are being charged or unable to navigate an intentionally complex cancellation process,” Rep. Takano said in a statement.
The bill is simple enough, stating that it would be unlawful to charge any method of payment for “any good or service sold in a free-to-pay conversion contract entered into on the Internet.” Exceptions would be if the seller obtained express informed consent from the buyer, including an explanation that a free trial will become a recurring billing arrangement.
The bill would also require sellers to provide their customers with a reminder of the terms of the contract once the free period expires, and quarterly as long as the customer keeps the subscription. The customer would have to opt in to recurring billing at the end of the free trial period.
Most importantly, the bill would require the way that users cancel their subscription mirror the way that they signed up for it in the first place: If they joined a program online, the company would have to let them cancel online, not call in to a phone line where a representative will try to talk them out of canceling.
The Federal Trade Commission and state attorneys general would take care of punishing negative option wrongdoers, as they do now.