Is a free trial that rolls into a paid plan a negative option?

A free trial qualifies when the customer must take affirmative action to cancel before the trial ends to avoid being charged; the Telemarketing Sales Rule calls that a free-to-pay conversion. A court applied ROSCA’s disclosure rule to Amazon Prime free trials that automatically convert into paid memberships.

Can we pre-check the box that enrolls customers in an add-on?

Not safely, because FTC orders treat that setup as a negative option. One FTC order defines a negative option feature to include forced upsells from which consumers must take affirmative action to opt out, such as unchecking a pre-checked box. Instacart’s order separately required it to obtain the consumer’s express, affirmative consent to the negative option feature offer.

Do the online negative option rules apply to phone sales?

ROSCA’s text is limited to transactions effected on the Internet. Telephone offers are covered instead by the Telemarketing Sales Rule, which requires disclosure of all material terms of the negative option feature, including the charge dates and the steps to avoid the charges.

Can we collect the card first and show the terms afterward?

Not under ROSCA, which requires that billing information be collected after the disclosures, not before. A seller may still offer to autofill billing information already on file, provided the consumer is given that choice after the disclosures.

How simple does cancellation have to be?

Simple enough that it is not difficult, costly, confusing, or time consuming, and at least as simple as the way the customer signed up. ROSCA itself does not define “simple mechanisms.” Courts have filled the gap: in FTC v. Cardiff, a ROSCA case, the court specified that the defendant needed to provide cancellation methods that were not difficult, costly, confusing, or time consuming, and at least as simple as the mechanism the consumer used to initiate the charge.

Which federal rules reach negative options, and is the old Negative Option Rule the only one?

Several do, each with its own limit. As of Chair Khan’s March 2023 statement, the Telemarketing Sales Rule applied only to telemarketing, ROSCA only to online shopping, and the existing Negative Option Rule only to prenotification plans. A later matter bears on that picture: the Commission approved a final rule amending the Negative Option Rule, which Commissioner Holyoak’s dissent said greatly expanded the prior rule that had covered prenotification plans.

Can executives be personally liable for a company’s negative option practices?

Yes, when the FTC proves three elements. In Credit Bureau Center, the court required the corporate defendant’s liability, the individual’s knowledge of the practices, and the individual’s control over or direct participation in them. The FTC also sued three Amazon executives along with the company. The court held at the pleading stage that the complaint sufficiently alleged their actual or constructive knowledge of ROSCA’s requirements.

BillingLegal test

Negative option

Berkeley Robinson, Managing Attorney at Robinson Law Firm PLLC

Author

Berkeley Robinson, Esq.

Managing Attorney, Robinson Law Firm PLLC

Berkeley has served as the go-to counsel for many scaling businesses in a transactional and litigation management capacity. Before becoming an attorney, Berkeley grew sales teams, ran online marketing campaigns, and did everything else an entrepreneur does—and still does today as the founder of two online businesses.

Definition

The term "negative option" is used in more than one setting, and its meaning depends on the context. In federal consumer protection law, a negative option feature means, in an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer Source: 16 C.F.R. § 310.2(w). The Restore Online Shoppers’ Confidence Act takes that definition of the term from the Telemarketing Sales Rule. Source: 15 U.S.C. § 8403

Key legal rules

Negative options are regulated mainly through ROSCA, the Telemarketing Sales Rule, and the original Negative Option Rule, and each source places its own duties on the seller. These are the main rules:

For goods or services sold in a transaction effected on the Internet through a negative option feature, the seller must provide text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information. Source: 15 U.S.C. § 8403
For those same online sales, the seller must obtain the consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account for products or services through the transaction. Source: 15 U.S.C. § 8403
For those same online sales, the seller must provide simple mechanisms for a consumer to stop recurring charges. Source: 15 U.S.C. § 8403
ROSCA requires that billing information be collected after the disclosures, not before, although a seller may let consumers autofill billing information already on file so long as the consumer is given that choice after the disclosures. Source: FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss (May 28, 2024)
Whether a ROSCA disclosure is clear and conspicuous is judged in context: the court considers the text, whatever size it is, in relation to the other elements on the page. Source: FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss, No. 2:23-cv-00932-JHC
A website that fails to provide a consumer any information about a service cannot obtain the consumer’s express informed consent to purchase that service. Source: FTC v. Credit Bureau Center, LLC, Memorandum Opinion and Order
In a telemarketing sale, if the offer includes a negative option feature, the Telemarketing Sales Rule requires disclosure of all material terms and conditions of the negative option feature, including that the customer’s account will be charged unless the customer takes an affirmative action to avoid the charge, the date or dates of the charge, and the specific steps the customer must take to avoid it. Source: 16 C.F.R. § 310.3(b)
The Telemarketing Sales Rule separately bars misrepresenting any material aspect of a negative option feature, including that the customer’s account will be charged unless the customer takes an affirmative action to avoid the charge, the date or dates of the charge, and the specific steps the customer must take to avoid it. Source: 16 C.F.R. § 310.3(b)
In any telemarketing transaction, the seller or telemarketer must obtain the express informed consent of the customer to be charged for the goods or services and to be charged using the identified account. Source: 16 C.F.R. § 310.4(a)(7)
The original Negative Option Rule reaches a contractual plan under which a seller periodically sends subscribers an announcement identifying merchandise it proposes to send, and subscribers are billed for it unless they instruct the seller not to send it. Source: 16 C.F.R. § 425.1 For those plans, it is an unfair or deceptive act or practice for the seller to fail to ensure that promotional material clearly and conspicuously discloses the material terms of the plan. Source: 16 C.F.R. § 425.1

For the sake of space, this page lists only the primary rules related to this term that most businesses should follow. More may apply to your situation, and your unique facts affect how they apply.

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Why these rules exist

Congress found that third party sellers who used a free trial period to enroll members and then periodically charged them until they affirmatively canceled took advantage of consumers’ expectations that they would have an opportunity to accept or reject the membership offer at the end of the trial period. Source: 15 U.S.C. § 8401 Because the seller collects when the customer does nothing, the arrangement works best for the seller when the customer has not noticed it. That is why the duties attach to the points where silence could be mistaken for agreement: what the customer was told before paying, whether the customer actually agreed, and whether the customer can get out. Chair Lina M. Khan made the same point in a March 2023 statement, writing that the structure can be harmless and can even benefit consumers when properly disclosed, but that problems arise when businesses manipulate consumers away from taking the affirmative step. Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)

Enforcement examples

FTC v. Commerce Planet, Inc. (free online auction starter kit with a negative option trial)

FTC v. Commerce Planet, Inc., Memorandum of Decision, No. 8:09-cv-01324-CJC(RNBx) (C.D. Cal. June 22, 2012)

Commerce Planet marketed OnlineSupplier as a free “Online Auction Starter Kit” that purported to help consumers sell products on eBay, with a free trial period and a small shipping and handling fee; consumers who did not cancel within the trial period were automatically charged a recurring monthly fee ranging from $29.95 to $59.95. Source: FTC v. Commerce Planet, Inc., Memorandum of Decision of the District Court, Introduction The district court found that the disclosure of the negative option plan, by its placement, wording, colorization, spacing, and size of the text, was designed not to be clear and conspicuous but to mask information about the continuity program without entirely omitting it. Source: FTC v. Commerce Planet, Inc., No. 8:09-cv-01324-CJC(RNBx) (C.D. Cal. June 22, 2012)

Outcome. The district court found the company’s former president and consultant, Charles Gugliuzza, individually liable under section 5(a) of the FTC Act and awarded the FTC restitution for consumer redress of $18.2 million. Source: FTC v. Commerce Planet, Inc., No. 8:09-cv-01324-CJC(RNBx) (C.D. Cal. June 22, 2012) On appeal, the Ninth Circuit held that the district court did not abuse its discretion in calculating the amount. Source: FTC v. Commerce Planet, Inc. (9th Cir.), Opinion It vacated the judgment because it did not actually hold him jointly and severally liable for the company’s restitution; on remand the district court could reinstate the $18.2 million award if it decided to impose joint and several liability. Source: FTC v. Commerce Planet, Inc. (9th Cir.), Opinion

FTC v. Credit Bureau Center, LLC (free credit report that enrolled consumers in a monthly credit-monitoring subscription)

FTC v. Credit Bureau Center, LLC, No. 21-2945 (7th Cir. Aug. 30, 2023)

The company’s websites offered visitors a free credit report but automatically enrolled them in a $29.94 monthly membership subscription when they applied for it, and the information about the monthly membership was scant and buried in much smaller text. Source: FTC v. Credit Bureau Center, LLC, No. 21-2945 (7th Cir. Aug. 30, 2023) Contractors drove traffic to the sites by posting Craigslist advertisements for fake rental properties and directing applicants to the company’s websites for a “free” credit score. Source: FTC v. Credit Bureau Center, LLC, No. 21-2945 (7th Cir. Aug. 30, 2023)

Outcome. The district court granted the FTC summary judgment on its ROSCA claim because no reasonable jury could find that the company clearly and conspicuously disclosed that the site involved a negative option transaction or that consumers gave their express informed consent. Source: FTC v. Credit Bureau Center, LLC, Memorandum Opinion and Order The district court’s final judgment permanently barred the defendants from offering any Credit Monitoring Service with a Negative Option Feature. Source: Final Judgment and Order for Permanent Injunction and Other Equitable Relief Against Defendants Credit Bureau Center, LLC and Michael Brown, § I After the Supreme Court’s decision in AMG Capital, the Commission moved to amend the judgment, and the district court reinstated the $5 million restitution award under ROSCA and section 19. Source: FTC v. Credit Bureau Center, LLC, No. 21-2945 (7th Cir. Aug. 30, 2023) The Seventh Circuit affirmed the amended judgment and struck only its direction that leftover funds go to the Treasury as disgorgement. Source: FTC v. Credit Bureau Center, LLC, No. 21-2945 (7th Cir. Aug. 30, 2023)

FTC v. Maplebear Inc., d/b/a Instacart (14-day free trials that renewed into annual subscriptions)

FTC v. Maplebear Inc., Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (Jan. 13, 2026)

The FTC’s complaint alleged that Instacart did not clearly and conspicuously disclose that its 14-day free trials of Instacart+ automatically renew into paid annual subscriptions, typically priced at $99 per year, so that consumers were enrolled in and charged for a paid subscription at the end of the trial. Source: Complaint for Permanent Injunction, Monetary Judgment, and Other Relief (FTC v. Maplebear Inc., d/b/a Instacart), ¶ 5

Outcome. The stipulated order, dated January 13, 2026, barred Instacart from failing to disclose, clearly and conspicuously and before obtaining the consumer’s Billing Information, all material terms of a negative option transaction. Source: FTC v. Maplebear Inc. d/b/a Instacart, Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (Jan. 13, 2026) It also required Instacart to obtain the consumer’s express, affirmative consent to the Negative Option Feature offer. Source: FTC v. Maplebear Inc., d/b/a Instacart, No. 3:25-cv-10783 (N.D. Cal. Dec. 18, 2025) It also entered judgment of $60,000,000 as monetary relief. Source: FTC v. Maplebear Inc. d/b/a Instacart, Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (Jan. 13, 2026)

FTC v. Care.com, Inc. (auto-renewing caregiver memberships)

Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (FTC v. Care.com)

The FTC’s complaint alleged that Care.com trapped both families and caregivers in auto-renewing memberships without a simple mechanism to cancel recurring charges. Source: Complaint for Permanent Injunction, Monetary Judgment, and Other Relief (Care.com), ¶¶ 10, 43 It alleged that the cancellation flow for Premium seekers was a six-page process. Source: Complaint for Permanent Injunction, Monetary Judgment, and Other Relief (Care.com), ¶¶ 10, 43 It also alleged that consumers who found the inconspicuous cancellation flow had to navigate a multipage process rife with deceptive design tactics known as dark patterns. Source: Complaint for Permanent Injunction, Monetary Judgment, and Other Relief (Care.com), ¶ 4

Outcome. The stipulated order required a cancellation mechanism that is at least as easy to use as the method the consumer used to initiate the Negative Option Feature. Source: Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (FTC v. Care.com), §§ IV–V It also provided for a judgment of $8,500,000 as monetary relief. Source: Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (FTC v. Care.com), §§ IV–V

FTC v. Amazon.com, Inc. (Amazon Prime enrollment and cancellation)

FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss, No. 2:23-cv-00932-JHC

The FTC alleged that Amazon tricked, coerced, and manipulated consumers into subscribing to Amazon Prime by failing to disclose the material terms of the subscription clearly and conspicuously and by failing to obtain the consumers’ informed consent before enrolling them. Source: FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss, No. 2:23-cv-00932-JHC In one checkout screen, one option was a bright orange button reading, for example, “Get FREE Two-Day Delivery,” while the other was less conspicuous, blue hyperlinked text reading, for example, “No thanks, I do not want fast, FREE delivery.” Source: FTC v. Amazon.com, Inc., No. 2:23-cv-00932-JHC The FTC also alleged that Amazon’s online cancellation process required consumers to click six times and go through four screens, seeking to entice them not to cancel or merely pause the subscription. Source: FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss, No. 2:23-cv-00932-JHC

Outcome. Because the motions were brought under Rule 12(b)(6), the court had to accept the FTC’s allegations as true and view them in the light most favorable to the FTC. Source: FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss, No. 2:23-cv-00932-JHC On that footing, it could not conclude that the price and auto-renewal disclosures would be clear and conspicuous to any reasonable consumer. Source: FTC v. Amazon.com, Inc., No. 2:23-cv-00932-JHC It also could not dismiss the claim that the cancellation flow was not a simple mechanism. Source: FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss, No. 2:23-cv-00932-JHC

Exposure

A violation of ROSCA is treated as a violation of a rule under section 18 of the FTC Act. Source: 15 U.S.C. § 8404 The Commission can redress such a violation under section 19, which permits all forms of redress to make consumers whole, including “the refund of money.” Source: FTC v. Credit Bureau Center, LLC, No. 21-2945 (7th Cir. Aug. 30, 2023) The FTC Act also authorizes a civil penalty against a person who violates such a rule with actual knowledge or knowledge fairly implied on the basis of objective circumstances that the act is unfair or deceptive and prohibited by the rule. Source: FTC v. Amazon.com, Inc., No. 2:23-cv-00932-JHC The United States’ complaint against Cerebral put the inflation-adjusted cap at not more than $51,744 for each violation. Source: United States’ Complaint for Permanent Injunction, Monetary Relief, Civil Penalties, and Other Relief (Cerebral), ¶ 19 State attorneys general may separately sue over ROSCA violations that affect their residents to obtain appropriate injunctive relief. Source: 15 U.S.C. § 8405

The orders in individual matters showed what that exposure looks like. The final judgment against Credit Bureau Center and its owner permanently barred any credit-monitoring service with a negative option feature. Source: Final Judgment and Order for Permanent Injunction and Other Equitable Relief Against Defendants Credit Bureau Center, LLC and Michael Brown, § I The district court’s consumer-redress award survived appeal apart from the Treasury-disgorgement direction. Source: FTC v. Credit Bureau Center, LLC, No. 21-2945 (7th Cir. Aug. 30, 2023) Instacart’s order entered a $60,000,000 judgment as monetary relief. Source: FTC v. Maplebear Inc. d/b/a Instacart, Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (Jan. 13, 2026) That order provided that it would remain in effect for 10 years after its entry. Source: FTC v. Maplebear Inc. d/b/a Instacart, Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (Jan. 13, 2026) In the joint stipulation for an order resolving the United States’ action against Cerebral, the parties provided for $5,087,252.89 in monetary relief. Source: Joint Stipulation for Order for Permanent Injunction, Monetary Judgement, Civil Penalty Judgment, and Other Relief Against Defendant Cerebral, Inc., § XV They also provided for a separate $10,000,000 civil penalty judgment, most of which was suspended once $2,000,000 was paid. Source: Joint Stipulation for Order for Permanent Injunction, Monetary Judgement, Civil Penalty Judgment, and Other Relief Against Defendant Cerebral, Inc., § XV

Executives can be named as well. The FTC sued Amazon and three Amazon executives under ROSCA and section 5. Source: FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss, No. 2:23-cv-00932-JHC At the motion-to-dismiss stage the court concluded that the complaint sufficiently alleged that they had actual or constructive knowledge of ROSCA’s requirements. Source: FTC v. Amazon.com, Inc., Order Denying Defendants’ Motions to Dismiss (May 28, 2024) In Credit Bureau Center, the court granted summary judgment on the question of the owner’s personal liability. Source: FTC v. Credit Bureau Center, LLC, Memorandum Opinion and Order, Part II

FAQs

1.Telemarketing Sales Rule. 16 C.F.R. § 310.2(w)
2.15 U.S.C. § 8403. 15 U.S.C. § 8403
3.15 U.S.C. § 8403. 15 U.S.C. § 8403