DAR File No. 32687

Commerce, Consumer Protection

R152-11-12

Negative Options

NOTICE OF PROPOSED RULE

DAR File No.: 32687
Filed: 05/21/2009, 02:23
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this amendment is to eliminate inconsistent and confusing Utah requirements at a time when more transactions cross state boundaries.

Summary of the rule or change:

This amendment makes Utah requirements for negative options consistent with federal requirements. If there are changes to the federal requirements, Utah requirements will automatically reflect those changes.

State statutory or constitutional authorization for this rule:

Sections 63G-3-201 and 13-2-5, and Title 13, Chapter 11

Anticipated cost or savings to:

the state budget:

No change in status quo. The Division of Consumer Protection will continue to enforce this rule.

local governments:

This rule is not applicable to local governments and, therefore, does not impact such budgets.

small businesses and persons other than businesses:

A cost savings would be realized by small businesses in Utah who now only have to meet the federal standards governing negative options.

Compliance costs for affected persons:

Compliance costs for suppliers that operate negative options may be reduced now that they will not have to meet federal, as well as state standards which may differ.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule filing could result in a cost savings to businesses as suppliers would now only have the federal standard to meet regarding negative options. Francine Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Consumer Protection
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY UT 84111-2316

Direct questions regarding this rule to:

Angela Hendricks at the above address, by phone at 801-530-6035, by FAX at 801-538-6001, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/15/2009

This rule may become effective on:

07/22/2009

Authorized by:

Kevin V Olsen, Director

R152. Commerce, Consumer Protection.

R152-11. Utah Consumer Sales Practices Act.

R152-11-12. Negative Options.

[A. Definitions:

1. A "negative option plan" means a contract under which a supplier either:

a. sends or offers to a consumer an announcement, advertisement or notice that:

i. the supplier proposes to send goods or provide services to the consumer (other than periodic supplements to previously acquired merchandise), and

ii. the consumer is required to pay for those goods or services unless the consumer affirmatively communicates that he refuses to accept the goods or services; or

b. sends or offers to a consumer a notice accompanying goods or services provided to the consumer that requires or purports to require that the consumer pay for those goods or services unless the customer affirmatively communicates that he refuses to accept the goods or services.

2. "Contract" includes, but is not limited to, any contract, marketing plan, arrangement or agreement between a supplier and a consumer.

B. Except as provided in paragraph C herein, the following acts or practices constitute a deceptive or unconscionable act or practice:

1. a supplier sends of offers goods or provides services to a consumer pursuant to a negative option plan;

2. a supplier interrupts, terminates, cancels or denies delivery of or provision of goods or services previously contracted for to a consumer solely on the basis that the consumer has not paid for or returned to the supplier goods or services which the consumer has not ordered, requested or authorized from the supplier.

C. Negative option plans do not constitute deceptive or unconscionable acts or practices if:

1. the supplier first receives specific approval, in writing and signed by the consumer, to send goods or services pursuant to a negative option plan.

a. The "specific approval" referred to in subparagraph B.1. of this rule shall be in writing and shall include the signature of the consumer.

b. The supplier shall maintain the original signed written consent of the consumer for a period of at least five (5) years after the date of signing or two (2) years after termination of the contract or agreement, whichever is longer; and

2. The following disclosures, or disclosures substantially similar to the following, are on the face of the contract or document evidencing the negative option plan and provided to the consumer before the consumer approves of the plan:

a. in bolded type which is 10 points or larger, that the transaction includes a "NEGATIVE OPTION PLAN"; and

b. the terms and conditions under which the negative option may be exercised, clearly and understandably stated; and

c. near the signature of the person entering into the consumer transaction, in bold type which is 10 points or larger: "I UNDERSTAND THAT THIS CONSUMER TRANSACTION INVOLVES A NEGATIVE OPTION, AND THAT I MAY BE LIABLE FOR PAYMENT OF FUTURE GOODS AND SERVICES UNDER THE TERMS OF THIS AGREEMENT IF I FAIL TO NOTIFY THE SUPPLIER NOT TO SUPPLY THE GOODS OR SERVICES DESCRIBED."]A. A negative option, as defined in 16 C.F.R. 425.1, is a deceptive act or practice only if the negative option violates 16 C.F.R. 425.1.

 

KEY: advertising, bait and switch, consumer protection, negative options

Date of Enactment or Last Substantive Amendment: [December 22, 2006]2009

Notice of Continuation: February 1, 2007

Authorizing, and Implemented or Interpreted Law: 63G-3-201; 13-2-5; 13-11