Deceptive Trade PracticeFalse Advertising

“Negative-Option” Class Action Investigation

“Negative-Option” Investigation

Migliaccio & Rathod LLP is investigating claims by online consumers who are unwittingly charged for products or subscription services through a “negative option” feature, in violation of the Restore Online Shoppers’ Confidence Act (ROSCA). The negative option is a marketing term that automatically changes your free trial into a paid subscription. Consumer are lured in with “risk-free” trial offers that morph into a full subscription service at the end of the trial period and which can be difficult to cancel or refund once the change has been made.

Products sold through a negative option are illegal unless the seller:

  1. clearly and conspicuously discloses material terms of the transaction before obtaining the consumer’s billing information;
  2. obtains the consumer’s express informed consent before making the charge; and
  3. provides simple mechanisms to stop recurring charges.

Consumers lured in by a negative option have found themselves involuntarily renewing services that they might have otherwise cancelled, had the steps to do so been visible and accessible. Consumers have been further frustrated by the cancellation process itself, which is oftentimes unclear or hidden behind convoluted menus.

The FTC, for example, has reached a $10 million settlement with online learning company ABCmouse for allegedly violating those established consumer protection principles. ABCmouse, the FTC alleged, did not disclose that memberships would automatically renew; that customer credit cards would be automatically charged without express authorization; or that charges would be difficult to cancel.

Hiding additional terms and conditions under difficult to read text or behind difficult to find hyperlinks is a tell-tale sign that the “free” or reduced price service offered may turn into a lengthy and expensive dispute.

Have you been charged subscription fees after a free trial?

If you were charged for a subscription after the free trial period ended, we would like to speak with you. Complete the contact form on this page or give us a call at (202) 470-3520.

Attorneys Committed to Consumer Protection

The lawyers at Migliaccio & Rathod have years of experience in class action litigation against large corporations, including in cases involving defective products and unfair & deceptive trade practices. More information about our current cases and investigations is available on our blog.