IFA Criticizes Final FTC Negative Option Rule
Regulation hurts consumers and small businesses alike by imposing new obligations on franchise businesses, such as fitness, personal wellness, and preventative health, without conducting necessary analysis on rule’s impact
WASHINGTON – The International Franchise Association (IFA) today released the following statement in response to the Federal Trade Commission’s (FTC) final Negative Option Rule:
“The final rule on negative options is the latest troubling example of this power-hungry FTC leaping without looking,” said Michael Layman, IFA senior vice president of government relations and public affairs. “The FTC has not conducted an empirical cost-benefit analysis to assess the proposed rule’s impact on small businesses, and yet it has hastily imposed this unnecessarily regulation that will hurt many franchise businesses and consumers alike by robbing them of convenience, time savings, a streamlined transaction experience, and lower costs. The rule not only disrupts a process that is working for the benefit of both consumers and small business owners, but also adds another layer of complexity into a system of billing already regulated by a host of federal and state regulations.”
Also known as “Click to Cancel,” a negative option contract involves a category of commercial transactions where subscriptions will automatically continue or renew unless the consumer takes an affirmative action to prevent it from continuing or renewing.
In June 2023, IFA submitted comments to the FTC expressing concerns about the proposed amendments to the Negative Option Rule. In January 2024, Sarah Davies, General Counsel of IFA, testified at an informal hearing of the Federal Trade Commission (FTC) on proposed amendments to the Negative Option Rule. A transcript of Davies’ full testimony is available here.
# # #
Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the approximately 806,270 franchise establishments that support nearly 8.7 million direct jobs, $858.5 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.