Dear Consumer Ed:
I signed up for a free trial of an online sports subscription, and a month later I was billed for it and had to call to cancel. The same thing happened to me with a credit monitoring service. Fortunately, I caught it on my bank statement right away, but what if I hadn’t? Are businesses allowed to automatically bill you every month after the free trial period is up?
Consumer Ed says: The two situations you have described are examples of so-called “negative option” plans. In a negative option plan, goods or services are provided to the buyer automatically unless, like you did, the buyer tells the seller that they don’t want them. More specifically, your examples are of negative option plans in the form of a free trial offer, which are very common.
The legality of this practice depends on the terms and conditions of the particular plan, and on how the seller discloses these terms and conditions to the buyer. Under the Federal Trade Commission’s Negative Option Rule, which the State of Georgia has adopted, the seller must disclose the following terms to you in a clear and conspicuous manner:
• The fact that the offer is a negative option plan
• Minimum purchase requirements, if any
• Cancellation Rights
• Refusal Rights
• Postage charges, if any
If a business doesn’t comply with the Negative Option Rule, the consumer isn’t obligated to pay for the products or services associated with the contract.
If you were enrolled in a negative option plan without your knowledge, and the terms and conditions of the plan were not described in a clear and conspicuous manner, you may file a complaint with the Federal Trade Commission by visiting ftc.gov or calling 1-877-FTC-HELP (1-877-382-4357); or the Governor’s Office of Consumer Protection by visiting our website at www.consumer.ga.gov or calling 404-651-8600.
Consumers who believe that they weren’t appropriately notified of the negative option billing should also consider consulting a private attorney to discuss their situation.
Consumer Ed is brought to you by the Governor's Office of Consumer Protection. Go to ConsumerEd.com to submit your question and read additional consumer tips. Remember…we do not give legal advice. Always consult a lawyer about legal issues.