CFPB issues warning on auto-renewal subscription services

The Consumer Financial Protection Bureau today issued a warning that subscription services that automatically re-enroll customers may violate the law if they do not clearly disclose their terms and obtain consumer consent, or if they make it “unreasonably difficult” for consumers to cancel.

“Negative option marketing” refers to a term or condition in which a seller may interpret a person’s silence or failure to cancel an agreement as continued acceptance of the offer, according to the CFPB. The agency said it has received complaints from consumers about being charged for products or services they did not intend to purchase or had sought to cancel, and that it brought enforcement actions against companies that engage in such practices. The CFPB cited enforcement actions against credit card providers offering “add-on” products as one example.

Companies offering negative option programs risk violating the Consumer Financial Protection Act if they fail to clearly disclose the negative option terms, fail to obtain consumer consent, or mislead or impede consumers wishing to cancel, the CFPB said. The agency added that it is partnering with the Federal Trade Commission to identify “dark pattern practices” that trick consumers into purchasing products and services they do not want, “and both agencies will continue to monitor these practices and bring agency actions where needed.”