Letter from Sam Levine, Director, Bureau of Consumer Protection, to California Governor Gavin Newsom Regarding FTC's Efforts to Address Harmful Practices Relating to Negative Option Marketing

UNITED STATES OF AMERICA
Federal Trade Commission
WASHINGTON, D.C. 20580
Office of the Director
Bureau of Consumer Protection
September 4, 2024
The Honorable Gavin Newsom
Governor of California
1021 O Street, Suite 9000
Sacramento, CA 95814
Dear Governor Newsom,
I understand that you are considering signing “click-to-cancel” legislation to address automatic
renewal and continuous service offers, two forms of negative option offers.1 As the Director of
the Bureau of Consumer Protection of the Federal Trade Commission (“FTC”), I write to provide
information about the FTC’s efforts to address harmful practices related to negative option
marketing. The views in this letter are my own and do not necessarily reflect the view of the FTC
or any individual Commissioner.
Negative option programs are widespread in the marketplace and can provide substantial benefits
for sellers and consumers. But far too often, companies manipulate consumers into making
recurring payments for goods that the consumers never intended to purchase or did not want to
continue buying. Over the years, deceptive and unfair negative option practices—such as failing
to make adequate disclosures, billing consumers without their consent, or making cancellation
difficult or imposing—have been a persistent source of consumer harm.
Enforcement Efforts
The FTC has regularly brought cases against negative option marketers alleging violations of
Section 5 of the FTC Act, 15 U.S.C. § 45(a), the Restore Online Shoppers’ Confidence Act
(“ROSCA”), 15 U.S.C. §§ 8401–8405, the Telemarketing Sales Rule, 16 CFR part 310, and
other laws and regulations that address aspects of negative option marketing.2 These matters
have addressed a wide variety of practices, including inadequate disclosures of hidden charges in
ostensibly “free” offers and other products or services, enrollment without consumer consent,
and inadequate or overly burdensome cancellation and refund procedures.3 For example, the
1 Negative option offers come in a variety of forms, all of which share a central feature: each contain a term or
condition that allows a seller to interpret a consumer’s silence, or failure to take an affirmative action, as acceptance
of an offer.
2 These authorities include the Rule on the Use of Prenotification Negative Option Plans, 16 CFR part 425, the
Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. §§ 1693–1693r, and the Postal Reorganization Act (i.e., the
Unordered Merchandise Statute), 39 U.S.C. § 3009.
3 Recent examples of these matters include: United States v. Adobe Inc., No. 5:24-cv-03630 (N.D. Cal. 2024); FTC
v. FloatMe, 5:24-cv-00001-XR (W.D. Tex. 2024); FTC v. Doxo, Inc., 2:24-cv-00569 (W.D. Wash. 2024); FTC v.
Amazon.com, Inc., 2:23-cv-00932 (W.D. Wash. 2023); FTC v. Vonage Holdings Corp., No. 3:22-cv-06435 (D.N.J.

FTC recently took action against Adobe and two of its executives, alleging that they trapped
customers into year-long subscriptions through hidden early termination fees and numerous
cancellation hurdles. And earlier this year, the FTC charged online cash advance provider Float
Me and its co-founders with using false promises of free money advances to lure consumers into
signing up for subscriptions, then using manipulative design features to make it difficult for
consumers to cancel.
Research and Outreach
Alongside its enforcement and rulemaking initiatives, the FTC has engaged in research and
outreach to address issues related to negative option offers. The FTC hosted a workshop in 2007
on negative option marketing,4 followed by a 2009 staff report covering topics such as
disclosures, consumer consent, and appropriate cancellation procedures.5 More recently, in
November 2021, the Commission published an “Enforcement Policy Statement Regarding
Negative Option Marketing” to provide guidance regarding its enforcement of various statutes
and FTC regulations.6 The statement explained that with respect to deceptive and unfair negative
option practices, “[t]he number of ongoing cases and high volume of complaints demonstrate
that there is prevalent, unabated harm in the marketplace.”
In April 2021, the FTC hosted a public workshop on digital dark patterns—design choices that
can trick or manipulate consumers into buying products or services, or giving up their privacy.7
Although the workshop explored user interfaces in a variety of different contexts, several
participants highlighted examples of dark patterns related to subscriptions. The FTC’s staff
report on the workshop, Bringing Dark Patterns to Light, provides several examples of such dark
patterns, including “free offers” with fine print disclosures that purport to lock consumers into
ongoing payments, and cancellation paths that force consumers to take a difficult-to-find,
confusing maze of website prompts in order to request a refund.
2022); FTC v. Age of Learning, Inc., 2:20-cv-07996 (C.D. Cal. 2020); FTC v. AH Media Group, LLC, 3:19-cv-
04022-JD (N.D. Cal. 2019); FTC v. Triangle Media Corp., 3:18-cv-01388-LAB-LL (S.D. Cal. 2019); FTC v. Credit
Bureau Ctr., LLC, No. 17-cv-00194 (N.D. Ill. 2018); FTC v. JDI Dating, Ltd., No. 1:14-cv-08400 (N.D. Ill. 2018);
FTC, Illinois, and Ohio v. One Techs., LP, No. 3:14-cv-05066 (N.D. Cal. 2014); FTC v. Health Formulas, LLC, No.
2:14-cv-01649-RFB-GWF (D. Nev. 2016); FTC v. Nutraclick LLC, No. 2:16-cv-06819-DMG (C.D. Cal. 2016);
FTC v. XXL Impressions, No. 1:17-cv-00067-NT (D. Me. 2018); FTC v. AAFE Products Corp., No. 3:17-cv-00575
(S.D. Cal. 2017); FTC v. Pact Inc., No. 2:17-cv-1429 (W.D. Wash. 2017); FTC v. Tarr, No. 3:17-cv-02024-LAB-
KSC (S.D. Cal. 2017); FTC v. AdoreMe, Inc., No. 1:17-cv-09083 (S.D.N.Y. 2017); FTC v. DOTAuthority.com, Inc.,
No. 0:16-cv-62186-WJZ (S.D. Fla. 2018); FTC v. Bunzai Media Group, Inc., No. CV15-04527-GW(PLAx) (C.D.
Cal. 2018); and FTC v. RevMountain, LLC, No. 2:17-cv-02000-APG-GWF (D. Nev. 2018).
4 FTC, “Negative Options: A Workshop Analyzing Negative Option Marketing,” https://www.ftc.gov/news-
events/events/2007/01/negative-options-workshop-analyzing-negative-option-marketing.
5 FTC, “Negative Options: A Report by the Staff of the FTC’s Division of Enforcement” (January 2009), available
at https://www.ftc.gov/sites/default/files/documents/reports/negative-options-federal-trade-commission-
workshopanalyzing-negative-option-marketing-report-staff/p064202negativeoptionreport.pdf.
6 Press Release, FTC to Ramp up Enforcement against Illegal Dark Patterns that Trick or Trap Consumers into
Subscriptions (Nov. 2021), https://www.ftc.gov/news-events/news/press-releases/2021/10/ftc-ramp-enforcement-
against-illegal-dark-patterns-trick-or-trap-consumers-subscriptions f.
7 FTC Workshop, Bringing Dark Patterns to Light, https://www.ftc.gov/news-events/events/2021/04/bringing-dark-
patterns-light-ftc-workshop.

Proposed “Click-to-Cancel” Rulemaking
In October 2019, the FTC published an advance notice of proposed rulemaking (“ANPR”) to
solicit public comment on the need for amendments to the Commission’s “Rule Concerning the
Use of Prenotification Negative Option Plans,” also known as the “Click-to-Cancel” or
“Negative Option Rule.”8 The ANPR requested comments on the current rule, as well as whether
and how it should use its rulemaking authority to address prevalent unfair or deceptive practices
involving negative option marketing. Many comments provided examples or statistics indicating
that deceptive negative option practices continue to be prevalent, with some describing particular
issues with free trials.
After reviewing the comments, on March 2023, the FTC issued a notice of proposed rulemaking
(“NPRM”) that would amend the rule in several ways, including changes to make it easier for
consumers to “click to cancel” recurring subscriptions and memberships. The proposed rule
would apply to all forms of negative option marketing. Among other things, it would: prohibit
misrepresentations regarding material facts regarding any aspect of the negative option
transaction, including facts related to the underlying product or service; require sellers to provide
basic information about the negative option offer prior to obtaining a consumer’s billing
information; require sellers to obtain a consumer’s express informed consent before charging the
consumer; and require sellers to provide a cancellation mechanism that is at least as simple as the
one used to initiate the charge or series of charges. The proposed rule would not supersede, alter,
or affect state statutes or regulations relating to negative option marketing, except to the extent
that a state statute, regulation, order, or interpretation is inconsistent with the proposed Rule.9
The FTC received more than 1,100 comments on the NPRM, and FTC staff is currently
analyzing the comments to determine the appropriate next steps.
I hope that the FTC’s work provides useful insight as you consider legislation addressing
automatic renewal and continuous service offers in California. To the extent the Federal Trade
Commission can provide assistance with these inquiries, please do not hesitate to contact me.
Very truly yours,
Samuel Levine
Director, Bureau of Consumer Protection
Federal Trade Commission
Cc: The Honorable Pilar Schiavo, California State Assembly
8 FTC, Advanced Notice of Proposed Rulemaking (Oct. 2, 2019),
https://www.federalregister.gov/documents/2019/10/02/2019-21265/rule-concerning-the-use-of-prenotification-
negative-option-plans
9 The proposed Rule also indicates state requirements are not inconsistent with the Rule to the extent they afford
greater protection to consumers.