Not Saying "No" Shouldn't Mean "Yes"

Last Updated Sep 15, 2009 1:47 PM EDT

Do you have trouble saying "no?"

I'm not talking about fending off that friend down the street who's constantly entreating you to participate in the community trash pick-up or spaghetti dinner fund-raiser.

What I'm referring to are those deals where marketers charge you and charge you and charge you because you never said "no." In fact, you never had a chance.

Here's what I'm talking about. Say you order a shirt from a catalog over the phone. At the end of the call, the sales rep offers you a free two-week trial subscription to Goat Lovers Monthly, an online magazine. You've always had a thing for goats; so you decide to try it. After the first week, you never give the magazine another thought. Six months later, however, you notice a recurring charge on your monthly credit card bill. Goat Lovers got your credit card info from the shirt company, and it's been charging you for all the months since your trial subscription expired.

This is what's called "negative option marketing," and it tricks consumers into paying in perpetuity for something they didn't really want. Such deals assume that if you don't say "no," you mean "yes" -- forever. Many consumers believe the practice is illegal -- after all, common logic says that silence does not mean assent -- but it's not.

These scams -- that's what I think they are -- take many forms. You might, for example, buy a new cell phone. After you make your purchase, the sales clerk offers to sign you up for a free trial of a roadside assistance service. Two months later, you find the monthly charge on your phone bill. You thought you were signing up only for the trial, but, because you didn't cancel, you're obligated to pay the monthly freight until you do. Here's another one: You get a $10 rebate check in the mail from a computer company. You figure the rebate applies to your computer purchase and cash it. But, by cashing it, you sign up for a membership program run by a company that bought your credit-card number from the computer outfit. Canceling these deals is never easy. Only after visiting the website do you find a phone number buried in fine print. And then, gallingly, you are told that "it may take up to three months for cancellation to become effective." After taking any trial offer, I now create a note on the my calendar warning me to cancel ahead of the deadline if I want to.)

Consumers have griped -- and plenty. In the last 36 months, the Better Business Bureau logged 7,000 complaints about unauthorized charges to credit cards by companies selling membership programs through free-trial offers. (Vertrue, which operates, promoted by econo-celeb Ben Stein -- and you can read more about that in a previous post -- was responsible for 2,500 complaints.) The Washington Attorney General has sued seven companies for deceptive offers involving negative option marketing. In one case, 13,000 customers were paying $14.95 a month on their phone bills for an internet service to which they were enticed with a "free" item. Only 5% ever used the service, and just one consumer received his freebie.

The Federal Trade Commission does regulate negative option deals -- but only those that provide what's called prenotification. I signed up for one of those when my son was getting married in St. Louis. I needed a restaurant where we could host the bridal dinner. Not knowing anything about the town's eateries, I signed up for a month with Zagat, an on-line restaurant review service. Zagat did what it was supposed to under FTC rules. It told me ahead of time that it would bill me monthly until I cancelled. (Even so, I had to call three or four times before I could get rid of the monthly charge.) Most of the deals that raise consumer ire are not prenotifications; they are instead the ones that give no warning that you be billed automatically, that don't require a real "yes," and that charge your credit card, bank account or phone even though you never provided account information.

The moment for change has come. The FTC is reviewing its outdated and hopelessly wimpy "prenotification negative option" regulation and asking the public whether or not the rule should be strengthened. The Direct Marketing Association, Magazine Publishers of America, and the Electronic Retailing Association have already weighed in to say -- not surprisingly -- that the current rule is just fine with them.

But consumers who've had lousy experiences with negative option marketing (and who hasn't?) should have their say too. Public opinion counts. Recall that after the Federal Reserve received 60,000 consumer complaints about credit cards, it beefed up regulation. If enough of us ordinary folks complain about sleazy negative option marketing, the FTC will be forced to clean up the mess.

Filing a comment is easy. Click here and make sure that you label your comment Prenotification Negative Option Rule Matter No. PO64202. Yeah, that's a quite a bit to type, but it's time to tell the powers that be that no "no" does not mean "yes." And hurry up because the deadline is October 15.