The Consumer Financial Protection Bureau issued a circular affirming that companies offering “negative option” subscription services must comply with federal consumer financial protection law.
Program Background: Negative option programs include subscription services that automatically renew unless the consumer affirmatively cancels as well as trial marketing programs that charge a reduced fee for an initial period and then automatically begin charging a higher fee.
Potential Violations: The CFPB said companies risk violating the Consumer Financial Protection Act if they do not clearly and conspicuously disclose the terms of their subscription services and obtain consumers’ informed consent, or if they make it unreasonably difficult for consumers to cancel.
