“To increase consumer protection with respect to negative options in all media, including on the internet, and for other purposes.”
No CRS summary available for this bill.
This section prohibits merchants of record from charging consumers through negative option contracts (i.e., auto-renewing subscriptions or services that continue billing unless canceled) unless they comply with new requirements on disclosures, consent, renewals, cancellations, and notifications. Specifically, it requires (1) clear and conspicuous disclosure of all material terms and express informed consent before any charge, with consent verification retained for at least 3 years; (2) limitations on automatic renewals after an initial term to no longer than that term without new consent; (3) simple cancellation mechanisms, including a direct electronic link for online contracts or equivalent for others; (4) for free-to-pay conversions (i.e., free trials converting to paid), pre-transaction disclosures of introductory and post-introductory charges (including total or 12-month costs) plus consent, and pre-charge notifications with cancellation access; and (5) regular notifications (at least annually) of contract terms and cancellation options, plus reminders 2-7 days before any cancellation deadline.
This section establishes Federal Trade Commission (FTC) enforcement authority for violations of the Act by treating such violations, and regulations thereunder, as unfair or deceptive acts or practices under section 18(a)(1)(B) of the FTC Act (15 U.S.C. 57a(a)(1)(B)); incorporates all applicable FTC Act terms, powers, penalties, privileges, and immunities (15 U.S.C. 41 et seq.); preserves other FTC authorities; and directs the FTC to promulgate necessary rules under APA procedures (5 U.S.C. 553). The section further authorizes state attorneys general (or equivalent officials or agencies) to bring civil actions in federal district court on behalf of state residents for Act violations—after providing written notice to the FTC (including the complaint), except when infeasible, in which case notice follows immediately; permits FTC intervention, participation, and appeal rights; prohibits state actions during pendency of FTC or DOJ civil enforcement against the same defendants for the same alleged violations; and preserves state powers to investigate, administer oaths, and compel evidence or witnesses under state law.
This section limits preemption of state laws to the extent they directly conflict with this Act's provisions. State laws providing greater consumer protections are not preempted, but differences in required compliance time frames constitute conflicts.
This section establishes definitions for terms used throughout the Act, including automatic renewal contract, continuity plan contract, express informed consent (i.e., affirmative consumer action separate from initial agreement consent, excluding inferred consent or manipulative interfaces), free-to-pay conversion contract, introductory period, merchant of record, negative option (i.e., consumer silence or inaction deemed acceptance), negative option contract (encompassing automatic renewal, continuity plan, free-to-pay conversion, and pre-notification negative option plan contracts), notification (i.e., clear, conspicuous disclosure of material terms and cancellation mechanism), preliminary period, pre-notification negative option plan contract, and simple mechanism (as described in 16 C.F.R. § 425.6 or successor).