Negative Option Features Under Scrutiny by FTC and DOJ helps define consumer complaints on MyLife.com. MyLife.com compiles all your information into a succinct report. MyLife.com offers free background “searches,” but advertises its subscription service by showing records that have blurred out potentially negative or criminal records. Subscribers complained that until 2019, you could not cancel the subscription unless you phoned the company, which answered unreliably and pitched more products when it did answer.
This practice attracted the attention of the Federal Trade Commission (FTC), which sued the company for “negative option marketing.” Negative-option marketing, according to the FTC, is when the seller interprets a customer’s failure to reject or cancel a subscription or service as acceptance of the seller’s offer. The FTC and the Department of Justice ultimately reached a $33.9 million settlement with MyLife.com, banning its negative option marketing practices. This post goes over the issues of law in this case, and what precedents or implications this decision sets.
Issues and Complaint
According to the FTC’s complaint, filed in July of 2020, MyLife violated the Retail Online Shoppers’ Confidence Act (ROSCA), which prohibits charging consumers for goods or services sold in Internet transactions using negative option features. To be in compliance with ROSCA, telemarketers must clearly and conspicuously state the terms of the agreement prior to billing, obtain the customer’s express and confirmed consent, and offer simple mechanisms to stop charging or opt out.
The complaint also alleged that MyLife violated the Telemarketing Sales Rule (TSR), which prohibits telemarketers from giving customers misleading or false information or omitting information on refunds and cancellations. In addition to violating TSR and ROSCA, MyLife’s practices of providing consumer reports to subscribers who did not have a legally permissible reason to obtain the information, and failing to ensure that the information was accurate, violated the Fair Credit Reporting Act (FCRA).
Precedents and Implications for Survey Research
With this decision, the DOJ and FTC drew a line saying that businesses should not make it difficult to cancel services. If your brand uses negative option practices, you must be certain that your subscription and cancellation policies are clearly and conspicuously disclosed. One way to be certain that your policies meet standards set under the TSR, ROSCA, and FCRA is to obtain survey evidence showing how a reasonable consumer would interpret your language and sales policies.
As more of our lives are led online, our digital footprint and our subscriptions can be difficult to keep track of. The consumer protections provided by TSR, ROSCA, and FCRA may see more challenges.