What is the prenotification negative option rule?

The Federal Trade Commission (FTC) enforces the Prenotification Negative Option Rule. This rule requires companies to give consumers information about their negative option plans, clearly and conspicuously, in any promotional materials that consumers use to enroll. If the sales presentation for a plan is made orally, such as on the phone, the terms and conditions still must be disclosed clearly and conspicuously during the presentation.

For example, companies must tell buyers:

* Whether there’s a minimum purchase obligation;

* How and when you can cancel your membership;

* How many announcements and rejection forms you’ll receive each year, and how often you’ll receive them;

* The proper procedure to reject merchandise;

* The deadline for returning a rejection form to avoid a shipment of merchandise;

* Whether billing charges include postage and handling.

For additional information, view the FTC Consumer Alert “Prenotification Negative Option Plans” available at www.ftc.gov/bcp/edu/pubs/consumer/products/pro09.shtm.

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