FTC To Hold Public Workshop on Negative Option Marketing

The Federal Trade Commission will host a workshop on January 25, 2007, in Washington, DC, to analyze the marketing of goods and services through offers with negative option features. The workshop, which will bring together consumer representatives, academics, and industry leaders, will address the pros and cons of such offers, discuss online marketing of such offers, and explore ways to make effective disclosures when such offers are made online. The workshop is free and open to the public. The Commission is also publishing a Federal Register notice soliciting public comment on the issues addressed by the workshop.

Negative option offers differ from traditional sales offers in that they typically presents an opportunity to consent in advance to continue to receive products or services in the future. The central characteristic of a negative option offer is that the seller interprets the consumer’s silence or failure to take an affirmative action to reject goods or services, or to cancel the sales agreement, as acceptance of the offer. Such offers take a variety of forms, with one of the best known being the prenotification negative option plan. In such a plan, consumers receive periodic announcements of upcoming merchandise and have a set period of time to decline the item. If they do not do so, the company sends the merchandise. In another common plan, called a continuity plan, consumers receive regular shipments of merchandise until they cancel the agreement. Finally, under a trial conversion plan, consumers agree to receive products or services for a trial period at no charge or at a reduced price. If the consumer does not cancel before the end of trial period, the product shipments continue, with the consumer incurring charges. All three plans have become more common in Internet marketing in recent years and will be discussed at the workshop.

The January workshop will address four main topic areas: 1) the pros and cons of negative option marketing from consumer, business, and academic perspectives; 2) consumer behavior with respect to online offers; 3) applicable standards for making negative option offers; and 4) how to make disclosures clear and conspicuous, yet compatible with the advertising message. It is anticipated that public comments on each of these topics will help workshop participants develop and shape industry best practices for making negative option offers both off- and on-line.

The workshop will be held at the FTC’s satellite building conference center, located at 601 New Jersey Ave., N.W., Washington, DC. For admittance to the conference center, all attendees will be required to show a valid form of photo identification, such as a driver’s license. Pre-registration is not necessary, but is encouraged. To pre-register, please e-mail your name and affiliation to: negativeoption@ftc.gov. Before the workshop, an agenda and additional information on attendees will be posted on the FTC’s Web site at: www.ftc.gov/bcp/workshops/negativeoption. Also, the Commission’s Federal Register notice poses a number of specific questions relating to the issues the workshop will address. Interested parties should submit their comments, relevant studies, surveys, research, and empirical data related to negative option marketing to the FTC by February 26, 2007.

Comments may be filed in either written or electronic form. Written comments should refer to “Negative Option Workshop - Comment P064202" and should be sent to: FTC/Office of the Secretary, Room 135-H (Annex E), 600 Pennsylvania Ave., N.W., Washington, DC 20580. Electronic comments may be submitted by visiting the following secure Web site:

https://secure.commentworks.com/ftc-negativeoptionworkshop. The Commission vote to approve the publication of a Federal Register notice announcing the workshop was 5-0.

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form. The FTC enters Internet, telemarketing, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies worldwide.

(FTC File No. P064202)