On October 30, the Pennsylvania Office of Attorney General announced a $750,000 settlement with a collectibles company resolving allegations that the business used deceptive “negative option” subscription features in violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. The settlement follows more than 200 consumer complaints concerning automatic enrollments, hidden charges, and aggressive collection activity.
According to the Attorney General’s allegations, the company misled consumers through its advertising, billing, and collection practices tied to recurring “negative option” features. The complaint asserted that consumers were unknowingly enrolled in ongoing subscription plans for collectible merchandise, often after responding to advertisements for discounted or “free” items. Specifically, the Attorney General alleged that the company:
- Failed to clearly disclose key terms. Advertisements and online listings did not conspicuously inform consumers of shipment frequency, total costs, or the nature of ongoing collections.
- Used deceptive marketing headings. The term “Satisfaction Guarantee” allegedly concealed fine-print conditions that automatically enrolled consumers in future purchases.
- Defaulted consumers into subscription plans. Consumers who did not affirmatively “opt out” were automatically charged for additional products sent as part of the plan.
- Issued misleading invoices. The company allegedly billed consumers for unsolicited merchandise and threatened to send unpaid accounts to collection agencies.
- Ignored cancellation requests and refund obligations. Consumers faced burdensome or unclear cancellation processes and were denied refunds contrary to the company’s stated terms.
- Processed unauthorized charges. The company allegedly billed credit cards without express, informed consent and disputed chargebacks filed by consumers.
Under the settlement, the company is permanently barred from using negative option marketing or automatic enrollment without express consent. It must clearly disclose all material terms, allow cancellation through the same method of enrollment, cease all collection efforts, and discharge more than 180,000 affected consumer accounts. The company also agreed to pay $707,986 in restitution to consumers and $42,014 in costs to the Commonwealth.
Putting It Into Practice: While the FTC’s rulemaking efforts on negative option practices stalled earlier this year (previously discussed here), the risk of enforcement for negative option practices still persists at the state level. Financial institutions, fintechs, and payment processors offering recurring or subscription-based services should review their enrollment flows, renewal notices, and cancellation methods to ensure clear affirmative consent and transparent disclosures.
