If you wonder why eHarmony and other companies don’t send you an email before they charge your credit card for your auto-renewal, and don’t show their phone number anywhere on their website… and how they get away with it, it’s because none of it is illegal.
The Federal Trade Commission is aware of “autorenewal” schemes, which falls under a business practice called Negative Option Billing (Wikipedia). Though the FTC publishes consumer protection advisories on Continuity Plans, Prenotification Negative Option Plans, Trial Offers and Timed Trial Offers, there is little in federal regulations to control this sneaky sales practice.
Regarding “auto-renewals”, there are only two things that federal regulation provides:
- the offer should state instructions to cancel the auto-renewal (the how).
- the offer should state the deadline to cancel the auto-renewal (the when).
because the FTC’s “Negative Option Rule” (16CFR425) was designed in 1973 for “mail-order book club” membership subscriptions and subscriptions who ship merchandise. Therefore, fitness club memberships don’t apply. eHarmony can get away burying the how and the when deep in their fine print.
Of course, industry organizations such as the Magazine Publishers of America and the Electronic Retailing Association are all at arms against changes to the regulation — because they work!
Nonetheless, things are changing, albeit slowly.
- The FTC ran a workshop on negative option billing on January 2007. Read the results of workshop.
- From May to November 2009, they asked the public for comments on policy changes:
- Read the formal recommendations of the Offices of Attorney General of nineteen states (Arkansas, Conneticut, Delaware, Illinois, Kansas, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nevada, New Jersey, New Mexico, Ohio, Oregon, Tennessee, Vermont and West Virginia) and of Florida.
- In contrast, read the recommendations of the Electronic Retailing Association.
- In December 2009, Visa and the FTC advised consumers that, if you can’t resolve it with the merchant, call your credit card and dispute the charge.
Will No-notice Auto-renewals soon be outlawed? Time will tell.
Here is the website to file a complaint with the Federal Trade Commission: https://www.ftccomplaintassistant.gov/ The FTC doesn’t resolve complaints, but the incident will be recorded and used in policy making.