[Federal Register Volume 71, Number 248 (Wednesday, December 27, 2006)]
[Notices]
[Pages 77753-77754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-22147]


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FEDERAL TRADE COMMISSION


Public Workshop: Negative Options: An FTC Workshop Analyzing 
Negative Option Marketing

AGENCY: Federal Trade Commission (FTC).

ACTION: Notice announcing public workshop and requesting public 
comment.

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SUMMARY: The FTC is planning to host a public workshop that will 
analyze the marketing of offers of goods and services with negative 
option features. The workshop will address the pros and cons of such 
offers, discuss online marketing of such offers, and explore ways to 
make effective disclosures in online advertising of such offers.

DATES: The workshop will be held on Thursday, January 25, 2007 from 8 
a.m. to 4:30 p.m. at the Federal Trade Commission's Satellite Building, 
located at 601 New Jersey Avenue, NW., Washington, DC. The event is 
open to the public and there is no fee for attendance. Pre-registration 
is not required. Comments addressing the workshop agenda topics and the 
issues discussed by the panelists at the workshop must be received on 
or before February 26, 2007.

ADDRESSES: Interested persons are invited to submit written comments 
addressing the workshop agenda topics and the issues discussed by the 
panelists at the workshop. Comments should refer to ``Negative Option 
Workshop--Comment P064202'' to facilitate the organization of comments. 
A comment filed in paper form should include this reference both in the 
text and on the envelope, and should be mailed or delivered, with two 
copies to the following address: Federal Trade Commission/Office of the 
Secretary, Room 135-H (Annex E), 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. If the comment contains any material for which 
confidential treatment is requested, it must be filed in paper (rather 
than electronic) form, and the first page of the document must be 
clearly labeled ``Confidential.'' \1\ The FTC is requesting that any 
comment filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area, and at the 
Commission, is subject to delay due to heightened security precautions.
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2 (d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    Because U.S. postal mail is subject to delay due to heightened 
security measures, please consider submitting your comments in 
electronic form. Comments filed in electronic form (except comments 
containing any confidential material) should be submitted by visiting 
the Web site at https://secure.commentworks.com/ftc-negativeoptionworkshop and following the instructions on the Web-based 
form. To ensure that the Commission considers an electronic comment, 
you must file it on the web-based form at the https://secure.commentworks.com/ftc-negativeoptionworkshop Web site. If this 
Notice appears at www.regulations.gov, you may also file an electronic 
comment through that Web site. The Commission will consider all 
comments that regulations.gov forwards to it.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
public comments that it receives, whether filed in paper or electronic 
form. Comments received will be available to the public on the FTC Web 
site, to the extent practicable, at http://www.ftc.gov. As a matter of 
discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC Web site. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Robin Rosen Spector, 202-326-3740, 
Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW., Room NJ-
2202, Washington, DC 20580. Prior to the workshop, an agenda and 
additional information for attendees will be posted on the FTC's Web 
site, www.ftc.gov/bcp/workshops/negativeoption.

SUPPLEMENTARY INFORMATION: 

Background and Workshop Goals

    Many offers for products or services marketed to consumers today 
include not just an offer for one product or an initial provision of 
services, but the opportunity to consent in advance to continue to 
receive products or services in the future. This type of sales offer or 
agreement is commonly known as a ``negative option offer.'' The central 
characteristic of a negative option offer is that 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.
    Negative option offers take a variety of forms. One of the best 
known is a prenotification negative option plan. In such a plan, 
consumers receive periodic announcements of upcoming merchandise and 
have a set period of time to contact the company and decline the item. 
If they remain silent, the company sends them the merchandise. Another 
common offer is called a continuity plan. In this type of plan, 
consumers receive regular shipments of merchandise until the consumer 
cancels the agreement. A third popular offer is the trial conversion. 
Consumers in such a plan agree to receive products or utilize

[[Page 77754]]

services for a trial period at no charge or for a reduced price. If the 
consumer does not cancel the agreement before the end of the trial 
period, the product shipments or provision of services continue and the 
consumer incurs charges.
    The FTC's upcoming workshop ``Negative Options: Analyzing the 
Marketing of Offers with Negative Option Features'' will continue the 
Commission's long-standing efforts to address these types of sales 
offers in a manner that balances their benefits to businesses and 
consumers against the potential for deception and abuse. The workshop 
will provide an opportunity to learn more about the benefits and costs 
of negative option offers from consumer, business, and academic 
perspectives.
    With the explosion of Internet marketing over the past ten years, 
negative option offers are as much a fixture of online advertising as 
in any other advertising media. The workshop will bring together 
Internet experts, industry, and consumer groups to discuss consumer 
behavior online and how it affects consumers and marketers with respect 
to negative option offers.
    We expect to address the following questions:
    1. What are the pros and cons of negative option marketing?
     Why do businesses choose to structure offers with negative 
option features?
     What are the benefits of negative option offers to 
businesses and consumers?
     What are the costs of negative option offers to businesses 
and consumers?
     How do consumers interpret or misinterpret negative option 
offers?
    2. How do consumers behave when viewing and responding to marketing 
offers online?
     How do consumers navigate online advertising?
     How do marketers present contract terms and make 
disclosures in online advertising?
     What does online research reveal about how to communicate 
effectively important offer terms to consumers?
    3. How can marketers meet the clear and conspicuous standard for 
advertising disclosures when making negative option offers online?
     Are there issues unique to negative option offers that 
must be addressed when making clear and conspicuous disclosures?
     What challenges do marketers face in applying the clear 
and conspicuous standard to online negative option offers?
    4. How can advertisers make negative option offers with effective 
disclosures that are compatible with the advertising message?
     Where in online advertising should marketers make negative 
option disclosures?
     At what point in the sales offer should marketers make 
such disclosures?
     What types of information about the offer should marketers 
include in the advertising?

Form and Availability of Comments

    The FTC requests that interested parties submit written comments 
addressing the above questions to foster greater understanding of the 
issues. In particular, the FTC requests that commentators submit 
relevant studies, surveys, research, and empirical data. The comment 
period will remain open after the workshop so that interested parties 
can provide input regarding the discussions held at the workshop. 
Written comments must be received on or before February 26, 2007, and 
may be filed in either paper or electronic form. All comments should be 
filed as prescribed in the ADDRESSES section above.

    By direction of the Commission.
Donald S. Clark,
Secretary.
 [FR Doc. E6-22147 Filed 12-26-06; 8:45 am]
BILLING CODE 6750-01-P