Negative Option Offers: Online Free Trial and Subscription Products

What to disclose and where?

The incredible growth of online commerce has resulted in various methods for internet entrepreneurs to offer their products (goods or services) to consumers. One regularly used method is to offer products on a free trial and subscription basis, also referred to as a ‘negative option offer’.  There is nothing fundamentally unlawful about negative option offers. However, its use requires a proper communication of its many features to consumers. This article illustrates which type of information must be disclosed to consumers when using negative option offers and where the disclosures must be placed on the website. The article will examine these issues under U.S. law.
In online commerce, negative option features have become an often used method for companies to offer their products. Take Apple for example. Apple offers consumers a free three-month trial membership to Apple Music. If the consumer fails to cancel before the end of the thr...

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What to disclose and where?

1. Negative option features in practice - illustrating the issues

2. Laws governing the use of negative option features

3. Necessary disclosures for a lawful use of negative option features

4. Necessary Disclosures re Total Transaction Costs and Memberships

5. Necessary disclosures re cancellation policy

6. Where to place the necessary disclosures for a lawful use of negative option features

6.1. The criterion for a proper placement of disclosures: “Clearly and Conspicuously “

6.2. The proper location on the website: in close proximity to the triggering claim

6.3. Disclosures below the fold and behind hyperlinks

7. A prudent use of negative option offers