“It is a vote, unless doubted.”
Many of us have heard that phrase used to speed up a lengthy meeting. It’s been an accepted practice in such gatherings for years, and it’s usually well received in such settings.
A similar technique has become all too common in sales recently. Its use can cause confusion and large, unwanted charges to the unwary consumer. It’s known as negative option selling, and here’s how it works.
Simply put, the negative option seller assumes the buyer has made a purchase. It’s the responsibility of the buyer to notify the seller if the sale is to be canceled.
This kind of marketing was first tried by book and record clubs decades ago. They would send you several selections at deeply discounted prices, followed by shipments — usually monthly — of additional items. You would keep getting the products and bills for them unless you notified the company you didn’t want a particular item or canceled the service altogether.
Today, much of our buying is done using credit or debit cards, and there’s been more than a little abuse of consumers through negative optioning. A common tactic is charging consumers’ credit cards for things they hadn’t agreed to as part of a “free trial offer” on other goods or services.
An isolated case following a bank takeover happened a dozen or so years ago in Maine. As David Leach, principal examiner for the state’s Bureau of Consumer Credit Protection recalls, the new bank sent letters to customers advising they’d all be signed up for a feature-filled checking account unless they wrote back and de-clined the offer. When Leach pointed out that this was “not a good way to go about conducting business with existing clients,” the bank rewrote the offer to avoid the negative option. Leach calls the instance a “real aberration that was quickly corrected.”
At the national level, there have been some serious abuses. The Federal Trade Commission got tough in 2001 when it sued nine companies. An FTC official told Congress that some marketers were routinely charging customers’ accounts without consent once they had the credit card numbers or when accounts were transferred to another company. Congress took no action, and complaints continued to pile up.
The FTC’s standard of fairness is that marketing must not be deceptive. FTC staff testified during the agency’s 2007 workshop on negative options that terms of a sale should always be “clear and conspicuous.”
The testimony concluded that there’s lots of plain language guidance for consumers at www.ftc.gov and the witness urged consumers to avail themselves of that information. We’d urge marketers to take a second look there, as well.
The comment period on possible changes in the federal rules ended last week. Until the feds actually make changes, be your own watchdog.
To protect yourself from unwanted buying, be sure to read carefully any “free offer” or “trial period” promotion you’re considering. If you sign up, make sure you understand your obligations and that you can afford the additional required purchases beyond the freebies. Double-check the due date to return goods or cancel a selection. Otherwise, you may be stuck with the bill.
Be aware also that Maine and some other states have “free gift” laws. They say, in essence, if you didn’t order it, you can keep it at no obligation.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, P.O. Box 486, Brewer 04412, or e-mail email@example.com.