FTC Signals Crackdown on "Negative Option Marketing" and Dark Patterns

For years dark patterns, the user interface patterns designed to frustrate user experience and guide users towards actions and outcomes not in their best interest, have been one of the more irritating aspects of life online.

Now, it seems that regulators are finally taking notice. In a new enforcement policy statement issued on October 18th, 2021, the Federal Trade Commission (FTC) has warned that it is investigating what it calls Negative Option Marketing — a  term for a specific kind of dark pattern.

This new policy could signal a wider crackdown on “dark patterns,”  which have already come under intense scrutiny from data privacy regulations like the EU's General Data Protection Regulation and California's forthcoming California Privacy Rights Act (CPRA), both of which make the practice illegal for the gathering of consent in their jurisdictions.

Section 5 of the FTC Act gives the Commission the authority to prosecute companies for unfair or deceptive trade practices, and the agency has stepped up action on dark patterns recently. In 2020, the FTC brought suit against Age of Learning, Inc. (ABC Mouse) for allegedly misrepresenting cancellations, failing to disclose important consumer information, and making it difficult for consumers to cancel. The company agreed to a $10 million settlement and to change practices.

What is Negative Option Marketing?

'Negative option marketing' is essentially the FTC’s term for certain kinds of implied  or implicit consent,  in which consent is assumed without the explicit permission of the user. Per the FTC, negative option marketing takes many forms, but all of them share a central feature: "a term or condition under which the seller may interpret a consumer’s silence or failure to take affirmative action to reject a good or service or to cancel the agreement as acceptance or continuing acceptance of the offer."

In their statement, the FTC called out specific negative option marketing arrangements such as automatic renewals, continuity plans, free-to-pay or fee-to-pay conversions, and prenotification plans.

What are the FTC's Requirements for Negative Option Marketing Consent?

According to the FTC, companies soliciting consumer consent must meet four requirements:

• Clear and conspicuous disclosure of the terms of consent and how to cancel or withdraw consent must be provided
• Terms must be disclosed before asking for consent
• Consumer consent must be expressly informed 
• Must not impose unreasonable barriers to consent withdrawal or cancellation

Companies failing to meet these four requirements or using silence as tacit consent face enforcement actions from the FTC, which has signaled increased scrutiny of dark patterns.