Marketing and Negative-Option Sales

"The FTC uses the phrase “negative option marketing” broadly to refer to a category of commercial transactions in which sellers interpret a customer's failure to take an affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services."

In the age of vanity, miracle drugs and anything else imaginable, this scam has taken things to a new level. This time, the offering is for a low-cost “trial” offer involving tooth whiteners and related products. The ringleaders of the operation are Blair McNea, Jennifer Johnson, and Danielle Foss; although fifty-nine other corporate defendants are complicit. The trio is responsible for luring people into the expensive negative-option scam. Specifically, the scam tricks people into providing their billing information, supposedly to cover shipping and the trial product. Immediately thereafter, the defendants charge consumers for ongoing subscriptions to two nearly identical products until the consumers cancel. Unfortunately for the consumers, they are under the impression the purchase includes a single trial product for roughly $5. In reality, however, the consumer pays approximately $200 per month until they cancel the misleading subscriptions.

Federal Trade Commission Settlement

Shockingly, and justly so, the FTC settlement imposes a judgement in the amount of $92,011,601, which represents the amount consumers lost to the scam. Further, McNea and the corporate defendants receive a ban from negative-option sales, and from assisting others engaged in deceptive negative-option sales. As for Foss and Johnson, they are similarly subject to restrictions on negative-option marketing. A remaining portion of the judgment does exist, and is not enforceable upon the surrender of the defendants’ assets. Possessions include real estate, cash, and vehicles.

In the end, all defendants may not make misrepresentations regarding any good or service, going forward. Moreover, they may not participate in profiting from consumers’ personal information within the context of negative-option sales.