TL;DR:  No news on the FTC Negative Option Rulemaking...nada, nunca. This silence/delay may be due to some recent court decisions adversely impacting the FTC and federal agency rulemakings generally, which may be giving FTC leadership some pause on its aggressive rulemaking efforts.  Or not...who knows.  And on the left coast, California AB 2863 is still moving in the statehouse (don't CA legislators get the summer off?), but some recent business friendly amendments have softened the harshness of the initially proposed changes. See details below.

 

Many have been asking about the status of the FTC's proposed amendments to the Prenotification Negative Option Rule and when it will/might be published and go into effect.  In a nutshell...nuthin and nuthin.  Perhaps last October's SCOTUS Loper Bright decision, which effectively gutted the decades-old Chevron doctrine (where courts paid deference to agency rules) and N.D Texas Judge Ada Brown's even more recent decision delaying the FTC's ban on non-compete agreements, has given the top brass at 610 Pennsylvania Ave a bit of pause on all of its rulemakings.  Can't say for sure whether these developments are the cause for the delay here, but bottom line as of now...no news.  As soon as we hear something...you'll hear from us! 

 

CA AB 2863 was amended on August 23 and ordered to a third reading in the Senate on August 26.  This latest version is much more business friendly than prior versions, likely due to the efforts of industry folks working with Author Schiavo and her staff.  If enacted, the effective date would be moved back six months, from January 1, 2025 to July 1, 2025.  The following summarizes the current changes to the bill:

 

The prior version of the bill required businesses to provide consumers with various options to cancel a subscription, which may (not must) include a toll free telephone number (TFN), that must be answered "during normal business hours" (Note: the prior version of the bill defined this term, but the new version does not).  The new version provides that if calling a TFN to cancel is an option, and a consumer leaves a voicemail outside normal business hours requesting cancellation, the business must, within one business day of receipt, either cancel the consumer's subscription or call the consumer back regarding the request.  Assuming most businesses will choose the latter, we see a whole bunch of telemarketing issues that will need to be addressed, such as what if the consumer does not leave a call back number..will a seller have the ability to identify the number from the call (aka ANI, or automatic number identification)? What if the consumer had previously requested to receive no phone calls from the business (aka, an internal DNC request) ... can this message overcome that request? If this version goes through as currently amended, businesses that provide a TFN as a cancel option will need to carefully draft its recorded answering scripts to address these issues so as to avoid violating federal and/or state telemarketing laws.

 

Save Attempts.

By Phone:  A business that provides a telephone option to cancel may attempt to save the subscription (with a "discount offer or retention benefit") or provide information regarding the effect of cancelling, as long as it informs the consumer that they may complete the cancel request at any time by stating they want to cancel or using "words to that effect" (more on this in a sec).   If this occurs, the business must cancel the subscription immediately without any further obstruction or delay.  On "words to that effect," while at first blush this may be obvious, we can see a lot of ambiguity here in interpreting what a consumer might say when presented with save options.  Businesses that use an IVR for this purpose will need to think about what consumer responses could reasonably be interpreted as a final cancel request when presented with these options.

 

Online:  For cancel requests made online, a business may similarly attempt to save the sale and state the effect of cancelling, as long as it also "simultaneously displays a prominently located and continuously and proximately displayed direct link or button entitled “click to cancel,” or words to that effect, with the presentation of the discounted offer, other consumer benefit, or information."  This new language mirrors exactly what we have been advising clients to do before this amended version... that is... if you make a save attempt online, provide an equally prominent cancel option so consumers do not have to take additional steps to cancel.  Glad to see this approach now memorialized in the current version of the bill.