“A bill 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 establishes consumer protections for negative option contracts (i.e., automatic renewals or continuations unless the consumer affirmatively cancels). Specifically, it prohibits merchants of record from charging consumers via credit card, debit card, bank account, or other means using a negative option without (1) clearly and conspicuously disclosing all material terms beforehand; (2) obtaining the consumer's express informed consent beforehand, with verification retained for at least three years (or demonstrated technological safeguards ensuring consent); and (3) after a preliminary period, automatically renewing for a term longer than that period without new express informed consent. The section further requires (1) for electronic contracts, a simple online cancellation mechanism such as a direct link to an electronic form; (2) for non-electronic contracts, a simple cancellation mechanism in the same manner as entry or another simple method; and (3) regular notifications (at least annually, as determined by the Federal Trade Commission) of contract terms and cancellation access, plus additional notice 2-7 days before any specified cancellation deadline. For free-to-pay conversion contracts (i.e., initial free or discounted offers converting to paid), it mandates pre-transaction disclosures of introductory and post-introductory costs (including recurring amounts and 12-month total or range), express consent, and pre-charge notice with cancellation access.
This section establishes Federal Trade Commission (FTC) and state enforcement mechanisms for violations of the Act. It (1) treats such violations, including those of regulations promulgated thereunder, as unfair or deceptive acts or practices under FTC Act section 18(a)(1)(B) (15 U.S.C. 57a(a)(1)(B))—which authorizes the FTC to issue substantive rules defining such acts and enforce them via cease-and-desist orders and civil penalties—and (2) directs the FTC to enforce the Act using all powers, jurisdiction, duties, penalties, privileges, and immunities of the FTC Act (15 U.S.C. 41 et seq.), including notice-and-comment rulemaking under 5 U.S.C. §553, while preserving other FTC authorities. It further authorizes state attorneys general (or equivalent officials or agencies) to bring civil actions in federal court on behalf of state residents, subject to prior written notice to the FTC (or immediate notice if infeasible), FTC intervention and appeal rights, and a bar on state actions against defendants named in a pending FTC or DOJ civil enforcement action alleging the same violation; state investigative powers under state law are preserved.
This section limits preemption of state laws by this Act to the extent of direct conflicts, specifying that state laws providing greater consumer protections are not preempted and that differences in compliance time frames constitute conflicts.
This section defines terms used in the Act, including “automatic renewal contract” (i.e., a contract automatically renewed unless the consumer instructs otherwise), “Commission” (i.e., the Federal Trade Commission), “continuity plan contract” (i.e., a contract for periodic shipments or services unless the consumer instructs otherwise), “express informed consent” (i.e., affirmative consumer action unambiguously consenting to a negative option, separate from initial consent and excluding inferred consent or manipulative interfaces), “free-to-pay conversion contract” (i.e., a contract with an introductory period), “introductory period” (i.e., a preliminary period with free or discounted goods/services followed by an increase in charges), “merchant of record” (i.e., a person entering a financial contract with a consumer), “negative option” (i.e., a provision treating consumer silence or inaction as acceptance or renewal), “negative option contract” (i.e., any contract with a negative option, including automatic renewal, continuity plan, free-to-pay conversion, and pre-notification negative option plan contracts), “notification” (i.e., clear, conspicuous written notice of all material negative option terms, including cancellation mechanism), “preliminary period” (i.e., the period before a negative option takes effect), “pre-notification negative option plan contract” (i.e., a contract sending periodic offers that are automatically accepted unless rejected), and “simple mechanism” (i.e., as described in 16 C.F.R. § 425.6 or successor regulation).