Negative Option Marketing

Have You Been the Victim of a Negative Option Marketing Scheme?

Watch for Unauthorized Charges from ProFlowers EasySaver Rewards, Pizza Hut Web Loyalty Program, Acai Boost and Others

Imagine you ordered a pizza online for delivery. After paying for the pizza with your credit card, you are offered a coupon worth $15.00 off your next pizza purchase. What a great deal, you think; after all, who doesn't love a coupon for a product or service they routinely purchase? You click the "accept" button and enter your email address so that the coupon can be emailed to you.

Now imagine your surprise when you receive your credit card bill weeks later. Not only were you billed for the pizza, but also separately for a "customer loyalty" membership program. What you didn't realize when you clicked the "accept" button for that pizza coupon was that you were also authorizing a monthly charge of $10 to your credit card to receive "benefits" from the pizza company in the future.

Sound outrageous? Unfortunately, this practice—called "negative option marketing"—is increasingly targeting consumers who shop on-line. When a company uses negative option marketing, they act like you have already said yes to buying a product or service. Instead of saying “Yes, I want to buy that,” the company makes you say, “No, I don’t want that” to stop them from charging you. They may even put conditions on how you can say “No,” making it more difficult to get out of a membership or transaction.

Early users of this marketing technique were book-of-the-month clubs and the Columbia Record Club. With the rise of the internet, predatory negative marketing plans have increased.

According to testimony in 2001 by Elaine Kolish, former Associate Director of the FTC’s Bureau of Consumer Protection's Enforcement Division, the use of “negative option marketing is particularly troubling” when the company already has access to the consumers' credit or debit card information because of a prior purchase from the company or a third-party partner. In these cases, the company using negative option marketing “can easily charge consumers' accounts without their permission.” Kolish also noted that companies may fail to disclose that the consumer’s credit card information is being transferred to another company.

When you are on a website—especially if you have just made a purchase—and you are offered:

  • a gift card or gift code,
  • a coupon,
  • a one-time reward or
  • a reward or loyalty membership,

BE CAREFUL! Watch for fine print that may say accepting this offer lets the company charge your credit or debit card—which the company may already have access to.

In this situation, consumer may be enrolled in “trial” memberships, even without their knowledge or consent, for which their credit cards are charged repeatedly. These plans, which mislead and take advantage of consumers, are the target of Baron & Budd’s negative marketing option class action litigation. Companies like Proflowers, Pizza Hut and Acai Boost have used fraudulent marketing techniques to draw consumers into “reward” or “loyalty” programs that are then charged to their credit cards every month.

If you see unauthorized charges on your credit card each month from one of these or other companies for memberships, rewards or loyalty programs you never intended to join, contact us about your experience and concerns and find out about your legal rights.