On July 25, the FTC announced that it would retain its
Prenotification Negative Option Rule ("Rule") without
modification after completing a regulatory review of the
Rule. Numerous state and local law enforcement agencies had
submitted comments urging the FTC to expand the scope of the
Rule. The FTC declined to do so, and instead adopted a
wait-and-see approach regarding the impact of the Restore Online
Shoppers Confidence Act (ROSCA) and possible revisions to the
Telemarketing Sales Rule ("TSR").
The Rule covers those negative option plans that notify a
consumer that she will purchase a good unless the offer is declined
within a set period of time. For those of you old enough to
remember such things, think Columbia House Record Club. The
Rule enumerates seven material terms of the purchase plan that
sellers must clearly and conspicuously disclose; and also provides
guidance on how a consumer is notified regarding each
installment.
