Negative Option Marketing

Using one of its controversial edicts to set what some consider a new rule, the CFPB has opined that negative-option or “subscription” marketing of consumer-financial products or services may be unfair, deceptive, or abusive (UDAAP) and thus subject to significant sanction for both the provider and any third parties with which it works.1 Although the circular does not prohibit negative-option marketing, these sanctions and the sometimes-vague nature of stipulated safeguards may lead some financial companies simply to eschew subscription marketing. The circular is unclear as to the extent of a financial company’s liability for supporting sales via a third-party vendor whose practices fall short of CFPB expectations.