Sending Office: Honorable Mark Takano
Sent By: Brien.Courchene@mail.house.gov
Request for Cosponsor(s)

Supported by: Consumer Action, Consumer Federation of America, Truth in Advertising

Dear Colleague:

If you’ve ever made a one-time purchase online that somehow turned into a costly monthly subscription that was confusing and difficult to end – then this bill is for you. Act now and have your boss join us as a cosponsor.

Background: Companies like AdoreMe, Shoedazzle, and MyFreeScoreNow boast discounts and convenience, but when you try to capitalize they can lock you into deals packed with fees and recurring costs. This consumer complaint submitted to the Federal Trade Commission last year sums up the problem:

“When you place an order, you are automatically enrolled in a monthly “membership” which incurs an automatic charge each month to your account and credit card of $40 without permission! This is not clear at all when ordering. I never agreed to it!”

Last fall the FTC recouped nearly $20 million from a credit monitoring company that advertised free credit reports, but duped 145,000 customers to enroll in a costly membership based credit monitoring service. Many customers failed to notice the recurring charges for months, and those who tried to cancel by phone were given the run-around by customer service representatives. The sales tactic behind this sort of buyer fleecing is called negative option billing.

Negative option billing reverses the structure of a typical consumer purchase. It allows businesses to interpret a customer’s lack of action to reject an offer as approval to be charged for goods or services. Enticing deals and misleading marketing can obstruct consumers from realizing they agreed to much more than a free trail or one-time purchase. Obligations can remain unnoticed or misunderstood for months while costs pile up. Additionally, a customer seeking to terminate their enrollment is often met with cumbersome and confusing cancellation and return policies – as is illustrated by these two FTC complaints:

“I tried calling the company on five occasions and waited over 30 minutes each time. I called today and sat on the phone for exactly 52 minutes when finally a young lady answered.”

“I asked to cancel my account and she argued with me. Finally, she said it was cancelled. However, I checked my account and they have since charged me 39.99 – twice.” 

Solution: The Unsubscribe Act will ensure that buyers are less vulnerable to the confusing nature of online negative option agreements. Its three core provisions that protect online shoppers are:

You are provided a straightforward cancellation process:

  • Businesses are required to provide a cancellation mechanism that mirrors the customers’ method of enrollment. A simple “click-to-cancel” avenue allows buyers to escape an unwanted deal as easily as they were lured into it.

You cannot get stuck in a deal you don’t want or know about:

  • In addition to receiving affirmed consent from the customer at the onset of the negative option deal, the seller must receive an additional consent at the end of the trial period, before any new payment is collected. That means if a customer only intended on making a single purchase, but inadvertently enrolled in a pricey “membership” plan, the business cannot continue charging them unless they receive the customer’s clear approval.

You remain fully informed of all costs and cancellation terms:

  • Mandates that consumers receive periodic notification of all obligations and changes to their contracts. Proactively reminding buyers of recurring charges, reenrollment details, and agreement changes will help decrypt the complex nature of negative option agreements.

If you have any questions or would like to cosponsor this legislation, please contact Brien Courchene in Congressman Takano’s office at brien.courchene@mail.house.gov or 5-2305.

Sincerely,

 

Mark Takano

Member of Congress

Related Legislative Issues
Selected legislative information: Consumer Affairs, Economy
Related Bill Information

Bill Type: H.R.
Bill Type: 1097