What is negative option marketing
Instead of the merchant having to "sell" you a product or service, it starts with the assumption that youve already bought it. Its up to you, the consumer, to contact the merchant and cancel the order if you dont want to complete the transaction.
The Columbia Record Club and various "book-of-the-month" clubs were early pioneers of negative option marketing. The hook was an offer of five or ten books or records for free or at a heavily discounted price.
By accepting the offer, the consumer agreed to "join" the club and receive regular shipments of other books or records at the full price, unless the consumer took the "negative option," telling the company it did not want to receive that months offering.
As you might expect, negative option has been abused as its use has become more prevalent. The widespread use of credit cards and the growth of the Internet have fueled that abuse, to the point that federal and state consumer authorities have taken action.
In , the Federal Trade Commission cracked down on negative option abuses, suing nine companies for charging customers credit cards for products or services without gaining their express approval. The FTC found the companies, as part of a transaction with consumers, offered "free offers" or "trial offers" of other products and services, without disclosing that consumers would be billed for additional products or services unless they exercised the negative option.
But Congress took no action, and in the last four years, negative option marketing has increased, and so has its abuse. According to the FTC, companies selling magazine subscriptions through the negative option are among the worst offenders.
In the FTC logged , complaints about deceptive magazine sales. Two years later, the number of complaints had more than doubled, to well over , Magazine publishers are a bit defensive about that. In fact, the Magazine Publishers of America, an industry trade association, says it prefers to call negative option marketing "advance consent marketing.
A number of industry groups have established guidelines for advance consent marketing. MPA has created an educational document around one such set of guidelines," the group said in a statement on its Website. The lengthy MPA document, written in , is a set of "voluntary" guidelines for the independent contractors hired by publishers to sell magazine subscriptions.
Judging from the growing number of complaints received at the FTC about magazine sales, a reader might conclude these guidelines are not always followed. The concern associated with the practice of negative option billing has its origins in the nature of a contract of purchase and sale, as recognized in common law.
As every first year law student learns, such a contract consists of an offer and an acceptance. The history of consumer protection statutes is a chronicle of legislators attempting to ensure that the offer is conveyed without misrepresentation by the vendor to a purchaser who has an opportunity to make an informed choice to accept or refuse the offer.
This is because a contract that is made with a consumer who is unaware of key elements of the contract such as price, quantity and quality of the goods to be delivered is subversive of the efficiency of the market as a whole. The Ontario government also outlawed the practice in July This effectively replaces the repealed s.
From Wikipedia, the free encyclopedia. This section needs to be updated. What happens if I am a victim of a negative option marketing scheme?
What happens if I do pay for goods or services that were supplied using negative option marketing? If I demand a refund of monies paid for goods and services that were supplied using negative option marketing, how long does the business have to reimburse me my funds?
What should I do if a business refuses to refund me monies paid for goods or services supplied under negative option marketing? What are some situations when negative option marketing does not occur? Negative option marketing does not occur if: You have entered into a written contract and are being periodically supplied with goods or services and a change to the good or service is not a material one. A material change is a change that is significant enough to influence your decision as to whether to enter into the agreement for the supply of the goods or services.
You have entered into a written contract that provides for periodic supply of a good or service without further solicitation, and that contract sets out — prominently, and in clear and understandable manner — that the goods or services will be supplied periodically without further solicitation.
You know or ought to know that the goods or services were intended for delivery to someone else. If I am currently receiving a good or service under a one-year written contract that provides for the periodic supply of that good or service and my contract expires but the supplier continues to provide me with the same good or service without soliciting me, is that negative option marketing? What if a supplier says that I consented to receive a good or a service when I did not?
What happens if a supplier does not comply with the negative option marketing legislation?