FTC Seeks Public Input On Revamp Of Negative Option Rule

On March 11, 2026, the Federal Trade Commission (FTC) announced that it is seeking public comments on an Advance Notice of Proposed Rulemaking (ANPRM) regarding the Negative Option Rule (the Rule). The FTC previously adopted amendments to the Rule in 2024, which were scheduled to go into effect in July 2025. However, on July 8, 2025, the US Court of Appeals for the Eighth Circuit vacated the Rule, finding that the FTC had failed to perform the required preliminary regulatory analysis under Section 22 of the FTC Act (Custom Communications Inc. v. FTC, No. 24-3137, 8th Cir. July 8, 2025).

Businesses with subscription, automatic renewal, or other negative option plans should pay close attention to the FTC’s proposal, the outcome of which could require businesses to redesign user flows to ensure compliance with new requirements.

Below, we discuss the ANPRM and the FTC’s focus on negative option practices and outline key takeaways for businesses to consider as they design their products and compliance programs. The ANPRM was published in the Federal Register on March 13, 2026, and the comment period will close on April 13, 2026.

In Depth

What are negative option programs?

As the FTC explains in the ANPRM, a negative option is “any type of sales term or condition that allows a seller to interpret a customer’s silence, or failure to take an affirmative action, as acceptance of an offer.” The FTC notes that negative option programs typically fall into four key categories:

• Prenotification plans, in which a seller makes periodic offers of goods to consumers who are enrolled in a program and then sends and charges for the goods if consumers do not decline the offer
• Continuity plans, in which consumers agree to receive periodic shipments of goods or provision of services until they cancel
• Automatic renewals, in which a seller automatically renews consumers’ subscriptions once the current subscription period expires unless the consumer cancels
• Free-to-pay or nominal-fee-to-pay conversion offers, in which consumers receive goods or services during a trial period for free or at a nominal fee and are then charged a fee or higher fee when the trial period ends unless they cancel or return the goods

What are the current regulatory requirements for negative option programs?

The FTC addresses harmful negative option practices through a patchwork of laws and regulations, which include:

• The Rule, which defines disclosure and other requirements applicable to one specific type of negative option: prenotification programs for the sale of goods
• Section 5 of the FTC Act, which prohibits unfair and deceptive acts or practices and which the FTC has interpreted to require sellers to:
  • Disclose material terms of the negative option offer
  • Ensure these disclosures are clear and conspicuous
  • Provide these disclosures before the consumer agrees to the offer
  • Obtain consumer consent to these offers
  • Not impede promised cancellation procedures, and honor cancellation requests that conform to these procedures
• Restore Online Shoppers’ Confidence Act (ROSCA), which sets forth disclosure, consent, and cancellation requirements for goods and services sold through negative option programs online
• Telemarketing Sales Rule, which applies to negative option offers made by phone and requires disclosure of material terms, prohibits misrepresentation, and imposes specific requirements regarding payment authorization and acceptable payment methods

Additional federal statutes, including the Unordered Merchandise Statute and the Electronic Fund Transfer Act, also affect certain negative option marketing practices.

Most states have also enacted laws that set forth requirements for automatic renewal plans. For example, California’s Automatic Renewal Law applies to business-to-consumer plans that charge consumers after a free trial, continue until consumers cancel, or feature automatic renewals. Under California’s law, businesses must follow requirements relating to preorder disclosure, obtainment and retainment of consumer consent, post-order acknowledgements, pre-renewal notifications, annual reminders, and cancellation methods. A group of cities and counties in the state have formed the California Automatic Renewal Task Force to investigate unlawful autorenewal practices.

State autorenewal laws cover different transactions and impose different requirements on businesses offering negative option programs. States also pursue individual enforcement actions under these regimes, as well as state-level consumer protection statutes and, where applicable, ROSCA.

Why is the FTC interested in negative option rulemaking?

The FTC has sought to address unfair and deceptive negative option programs through rulemaking, most recently in October 2024 when it issued a final rule that overhauled the Negative Option Rule. Since the Rule applies to one, now less-common, type of negative option, the 2024 Rule set forth general requirements applicable to almost all sellers marketing negative option programs, regardless of the kind of negative option program being offered or the marketing medium being used. In July 2025, the Eighth Circuit vacated the final Rule before it could go into effect.

In the wake of the Eighth Circuit’s decision, the FTC continues to bring enforcement actions under other authorities, such as Section 5 of the FTC Act and ROSCA, challenging what it alleges are deceptive enrollment and onerous cancellation practices.

While acknowledging the potential benefits of negative option offers for sellers and consumers alike, the FTC explains in the ANPRM that negative option programs raise concerns when inadequate disclosures, failure to obtain consumer consent, or onerous cancellation processes result in “saddling consumers with recurring payments for goods and services they did not intend to purchase or they no longer want.”

As stated in the ANPRM, the FTC believes that the existing statutory and regulatory regime “does not provide industry and consumers with a consistent legal framework for negative option marketing across different media and types of plans.” Meanwhile, the FTC reports that it “continues to receive thousands of complaints each year regarding problematic negative option marketing” and that it has brought five cases and settled six others since January 2025 that all alleged negative option misconduct. The FTC maintains that all of these factors “suggest there is prevalent, unabated consumer harm in the marketplace.”

What information is the FTC seeking?

The FTC seeks comment about the status of the current negative options marketplace and the prevalence of unlawful negative option conduct.

The FTC’s request focuses on certain practices, including:

• Marketing practices or disclosures that make it difficult for consumers to recognize that they are enrolling in a negative option program or to understand its material terms
• Enrollment of consumers without their express informed consent
• Cancellation methods that impede or delay consumers’ attempts to cancel their enrollments
• Use of third parties, such as payment service providers, subscription management providers, or customer relationship management providers, to handle aspects of the enrollment and cancellation process
• The offering of discounts and incentives for continued participation in the program

The FTC asks the public for comment on how it might address unlawful conduct arising from those and other negative option practices. The FTC’s request is far reaching, asking about the costs and benefits involved in maintaining the current Rule, incorporating provisions of the vacated Rule, adopting other provisions, or addressing negative option practices through alternatives to regulation like business and consumer education.

The FTC will also consider procedures for businesses to request exemptions and whether to adopt general exemptions for certain businesses or industries.

Implications for businesses with subscription plans

If the FTC finalizes the Rule as proposed, as we believe is likely, businesses that offer subscription or autorenewal programs may face heightened compliance requirements. The ANPRM frames harms in terms of inadequate disclosure, lack of informed consent, and cancellation impediments, suggesting that the FTC’s rulemaking could address enrollment and cancellation processes. Once a revised Rule takes effect, businesses should be aware that the FTC could seek civil monetary penalties for violations.

Businesses should also remain mindful that the FTC is actively pursuing enforcement actions in this area under Section 5 of the FTC Act and ROSCA, focusing on inadequate disclosures, failure to obtain express consumer consent, and cancellation processes that are difficult or impossible to complete. Settlements in these cases have required payments of millions of dollars in consumer redress, along with commitments to implement clear and conspicuous upfront disclosures about negative option offers and simple, easy-to-find mechanisms for cancellation.

At the same time, states are increasingly regulating negative option offers and autorenewal practices through their own statutes and enforcement actions, further heightening compliance risk across jurisdictions.

As the FTC sharpens its focus on negative option programs through this latest round of rulemaking, businesses may wish to use this opportunity to review their subscription and renewal practices, including enrollment flows, renewal reminders, cancellation processes, and any incentives offered during cancellation attempts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.