Regulators continue to focus on the “dark patterns” of negative option marketing. Kelley Drye & Warren LLP

These days, consumers can get everything from newspapers to meal kits to credit monitoring services through a subscription. The prevalence of these services and the ease with which consumers can sign up has drawn the attention of regulators who are concerned that some negative option marketing can confuse or deceive consumers. The CFPB, FTC, and state AGs have been particularly vocal about practices they deem “dark patterns” and continue to focus on this area.

Today, the CFPB recognizes that the “dark patterns” surrounding negative option marketing violate the Consumer Financial Protection Act’s prohibitions on unfair, deceptive, or abusive conduct or practices. We have issued guidance to warn providers. As the memorandum reveals, the CFPB has already taken enforcement action alleging fraudulent practices related to negative choices (including this lawsuit against consumer reporting agencies and against registration and payment services for event and race organizers). (See this lawsuit against the company that provided the The announcement also notes that the CFPB’s approach to negative options “dark patterns” is generally in line with that of the Federal Trade announced its own enforcement policy statement on option marketing). This guidance highlights the need for businesses to use negative option marketing to ensure that consumers: 1) Understand the key terms of negative options. 2) provide informed consent before being billed; 3) Easily cancel recurring charges.

Negative option marketing includes a variety of products such as automatic renewals, continuous plans, and free to paid conversions. According to the CFPB, it’s important for consumers to understand the key terms of these products before signing up. Important terms that must be disclosed include:

• The fact that a consumer is registered and billed for a product or service.
• amount charged to the consumer.
• The fact that the charges will be repeated unless the consumer takes affirmative steps to cancel.When
• For free or reduced rate trial periods, the charges will begin or increase at the end of the trial period unless affirmative action is taken by the consumer.

In addition to clearly disclosing key terms, businesses must obtain informed consent from consumers before charging for products or services. A company will not be deemed to have given consent if it is found to have misinterpreted the negative optional features or provided contradictory or misleading information.

Finally, companies must avoid misrepresenting their cancellation policies, making cancellations unreasonably difficult, or ignoring cancellation requests made using company-established procedures. Ease of cancellation was a priority not only for federal regulators, but also for state AGs and self-regulatory bodies (read our article on NAD’s Blue Apron decision here). Many of these cases underscore the need for companies to ensure that their means of cancellation is as easy as signing up for a negative option.

While the CFPB’s interest in this area is nothing new, today’s guidance is a reminder that businesses should review their practices surrounding negative options as they continue to face increased scrutiny from regulators.

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