"Negative Options" is a fancy (and shortened) way of saying, "If you buy stuff from us, then we'll automatically keep sending you more stuff until you tell us not to.  Oh, and one more thing...we'll bill your credit card automatically for all the stuff we send you—until you tell us not to."

Negative options can be a really good thing—unless your company does it wrong, in which case it can get you in a lot of trouble.  (And by "trouble", I mean "sued", "fined", and/or "put out of business.")  Read on....

A "negative option" is not a new concept: record and book companies have been using the "negative option" for at least twenty years.  C'mon, who among us didn't have a Columbia House CD showing up in the mailbox once a month?  (Come to think of it, I think I still owe Columbia House some money from my 1980 purchase of AC/DC's "Back in Black."  I digress.)

Despite the "negative" connotation, negative options save time by automating payments, akin to setting up automatic payment mechanisms to pay your mortgage, your electric bill, and other recurring services that you may want (or need). 

The problem is that many companies don't clearly state the terms of the negative options that they offer to their customers.  (There are people who don't like when that happens, and I call those people "Attorneys General.") 

Customers who don't understand the negative option they sign up for usually feel like they're being ripped off.  Often they're not being ripped off—they simply didn't bother to read their sales contract before making their purchases.

So, what's a company to do??  Well, you have two options: do it right, or not.  If you do it right, all will be fine.  If not, you'll get prosecuted.   Your choice.

According to the FTC, here's how you do it "right" (with commentary by me....)

1.  Disclose material terms in an understandable manner, without making them unnecessarily long or inconsistent.  (BJG Comment: if you ramble, you're cooked.  If your document makes no sense, you're REALLY cooked).

2.  Make the disclosures clear and conspicuous by placing them where consumers are likely to look on Web pages, by labeling disclosures (and links to them) to indicate their importance and relevance, and by using easy-to-read fonts and colors.  (BJG Comment:  make important things OBVIOUS.)

3.  Disclose the offer’s material terms before the consumer incurs a financial obligation.  (BJG Comment: Let them know the four "Hows" before you take their money: How much?  How long?  How often?  How do I cancel?

4.  Obtain consumers’ affirmative consent to the offer by, for example, having them click “I Agree” and without relying on pre-checked boxes.  (BJG Comment:  Either make them check the "yes" box, or have them surrender their first born child.  Whichever is easiest.....)

5.  Avoid impeding the effective operation of promised cancellation procedures and honoring cancellation requests that comply with such procedures. (BJG Comment: They want their money back?  Fine, give it to them.  You don't need the cash that badly, and in any event, it's not worth the hassle of a government investigation.)


Concluding thought:  Negative options?  I like them.  Just make sure you do it right, or you'll end up being prosecuted by the State or Federal government. 

Questions?  Ask away.....