The Negative Option Rule (Trade Regulation Rule on Use of Prenotification Negative Option Plans) governs the operation of prenotification subscription plans. Under these plans, sellers ship merchandise automatically to their subscribers, and bill them for the merchandise if consumers do not expressly reject the merchandise within a prescribed time. The rule protects consumers by: (1) requiring that promotional materials disclose the terms of membership clearly and conspicuously, and (2) establishing procedures for the administration of such "negative option" plans.

On October 2, 2019, the Commission issued an Advance Notice of Proposed Rulemaking for the Negative Option Rule  seeking public comments on the effectiveness and impact of the rule and whether the rule needs to be amended to help consumers avoid recurring payments for products and services they did not intend to order and allow them to cancel such payments without unwarranted obstacles. 84 FR 52393 (Oct. 2, 2019). The comment period closed on December 2, 2019. On April 24, 2023, the Commission published a Notice of Proposed Rulemaking. 88 FR 24716 (Apr. 24, 2023). The comment period closed on June 23, 2023. Staff is reviewing the public comments.

In response to the proposed rulemaking, six of the more than 1,100 unique comments requested to present their positions at an informal hearing pursuant to section 18 of the Federal Trade Commission Act, 15 U.S.C. 57a, and the Commission’s Rules of Practice, 16 CFR 1.11(e). They include International Franchise Association, TechFreedom, the Performance Driven Marketing Institute, NCTA - The Internet & Television Association, FrontDoor, and the Interactive Advertising Bureau (IAB). Hearings were held on January 16 and 30, 2024, and February 14, 2024. On March 15, 2024, the Commission denied IAB’s Petition to review Presiding Officer Foelak’s January 25, 2024 Order denying its request to designate seven issues as disputed issues of material fact at the informal hearing.

On November 15, 2024, the Commission promulgated a final rule amending the Negative Option Rule that will require sellers to make it as easy for consumers to cancel their enrollment as it was to sign up. 89 FR 90476. The final rule’s provisions will go into effect on January 14, 2025. Regulated entities have until May 14, 2025, to comply with  425.4 through 425.6 of the Rule.