The Federal Trade Commission (“FTC”) has voted to extend the compliance deadline for key provisions of the amended Negative Option Rule (“Rule”) by 60 days, moving the enforcement date from May 14, 2025, to July 14, 2025.
Background
The FTC’s amendments to the Rule went into effect on January 19, 2025. These amendments significantly expand the requirements for businesses that use subscription models, automatic renewals, free-to-pay conversions, and other negative option features in their sales practices.
What This Means for Your Business
The 60-day extension applies specifically to compliance with three critical requirements in the Rule:
- Disclosure Requirements (§ 425.4): Businesses must clearly and conspicuously disclose all material terms of transactions involving negative-option features.
- Consent Requirements (§ 425.5): Businesses must obtain express informed consent to any negative-option feature before charging consumers.
- Cancellation Requirements (§ 425.6): Businesses must provide cancellation mechanisms that are at least as easy to use as the method consumers used to sign up for the service.
Rationale for the Extension
The FTC stated that the original deferral period “insufficiently accounted for the complexity of compliance.” The current Commission conducted a “fresh assessment of the burdens” and determined that additional time was warranted to allow companies to properly implement the required changes.
The prohibition against misrepresenting material facts in connection with negative option features (16 C.F.R. § 425.3) has been in effect since January 19, 2025, and remains enforceable.
Looking Ahead
The Commission signaled that after July 14, 2025, it will begin enforcing the Rule in its entirety. The FTC has also stated that it is still “open to amending the Rule” if its enforcement experiences reveal problems with its implementation.
Next Steps for Businesses
- Use This Time Wisely: The extension provides valuable additional time to ensure your negative option practices are fully compliant with all aspects of the amended Rule.
- Review Disclosure Processes: Evaluate whether your current disclosures meet the “clear and conspicuous” standard for all material terms.
- Audit Consent Mechanisms: Ensure your processes obtain express informed consent for all negative option features before charging consumers.
- Simplify Cancellation Procedures: Review and potentially redesign cancellation processes to ensure they are at least as easy to use as signup methods.
- Document Compliance Efforts: Maintain records of your compliance efforts, which may be valuable in the event of future regulatory inquiries.
The CommLaw Group Can Help!
Given the myriad of federal and state autorenewal requirements, as well as the increased risk of consumer protection enforcement by the FTC and state attorneys general, and even civil litigation, The CommLaw Group has a team standing by ready to answer your questions and help you navigate your business teams through changes to its operations and practices.
CONTACT US NOW, WE ARE STANDING BY TO GUIDE YOUR COMPANY’S COMPLIANCE EFFORTS
Susan Duarte – Tel: 703-714-1318 / E-mail: sfd@commlawgroup.com
Diana James – Tel: 703-663-6757 / Email: daj@CommLawGroup.com
