The News/Media Alliance submitted comments on June 23 on the Federal Trade Commission’s Proposed Amendments to the Negative Option Rule, which was published in the Federal Register on April 24. The Alliance reiterated its position that negative option subscription plans are already heavily regulated both at the Federal and state level and that the FTC has adequate authority already to act in this area. If the FTC chooses to move forward, The Alliance recommended that the FTC only enact regulations that are consistent with existing best practices and established state laws. The comments state that our members and customers rely on automatic renewal programs to ensure uninterrupted service, convenience, and cost savings. The FTC argues the proposed Rule is needed due to widespread deceptive practices; however, given the dramatic expansion of subscription-based services, there is no evidence that complaints have risen proportionally. Expanding the rule as proposed is unnecessary and will impose an additional and inconsistent regulatory layer that will disrupt effective standardized practices businesses have put into place to comply with state laws.

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Fact Sheet originally published by MPA – The Association of Magazine Media

Download PDF of Fact Sheet

Efforts to Regulate Subscription Marketing Practices Should Avoid Penalizing Consumer-Friendly Magazines

Magazine media publishers maintain exceptionally high levels of subscriber satisfaction through well-understood, simple subscription management processes that benefit consumers.

THE ISSUE

The Federal Trade Commission (FTC) and some state legislatures are considering new rules to restrict auto-renewal practices widely used by many subscription services, including magazine media publishers. But the consumer-friendly magazine sector has developed time-tested subscription management practices that work for subscribers.

Customer satisfaction is a cornerstone of the magazine media industry’s viability and vitality. The overwhelming majority of print and digital magazines in the United States are sold by subscription – about 95 percent in 2020. Magazine media publishers uphold high levels of consumer satisfaction through well-understood, simple subscription management processes that benefit consumers.

Many subscriptions are sold with an advance consent feature that allows readers to affirmatively accept the automatic renewal of their subscription, providing subscribers the benefit of uninterrupted delivery of their favorite titles. Subscribers like this feature, as evidenced by the extremely low numbers of consumer complaints.

Proposals pending before the FTC and some state legislatures – which likely are intended to address legitimate concerns about the actions of some bad actors outside of the magazine sector – would entirely disrupt the long-standing subscriber relations practices of magazine media publishers.

A BETTER SOLUTION

Directly target abusive practices of specific bad actors.

Target the real problem, not consumer-friendly magazines, by zeroing in on specific abuses and actors.

THE TAKEAWAY

• The magazine sector has developed consumer-friendly subscription management practices that subscribers appreciate.
• Opt-in subscription renewal enables uninterrupted access to the magazine titles that subscribers love.
• Imposing broad-brush regulations would punish good actors and disrupt the positive relationship magazine media maintains with their subscribers.

Magazine Media Delivers

Valued & trusted content

• Content that is researched, curated and edited.
• Readers value our educational, cultural, scientific, and informational content, in long-form articles and on digital platforms.

Diverse & multigenerational connections

• Read by more than 90% of U.S. adults across all age groups and demographics, including 18-25.
• A 1.5 billion audience across all its platforms – digital, mobile, video and print.

Commitment & investment to our communities

• More than 240,000 U.S. jobs supported with an annual average wage of more than $98,000.
• Trusted, long-standing first party relationship based on respect and transparency for our readers.
• Partner in environmental stewardship, using bio-degradable, recyclable and certified materials.

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Image: Getty

In early June, the California State Assembly approved legislation that would make it easier for consumers to cancel subscriptions involving free trials and introductory offers. The legislation, AB 2811, sponsored by Assemblyman Marc Berman (D-Palo Alto), was approved on a 63-0 vote, but would still need to be approved by the California Senate before the end of the legislative session on August 31 to become law.

The legislation amends a 2018 California law that requires merchants to provide a notice of the terms and conditions of an automatic renewal and options for cancellation, which consumers can review and approve. This underlying law includes a troubling provision that gives consumers the ability to sue businesses for non-compliance with its requirements.

The intent of AB 2811 is to give consumers the ability to cancel their subscriptions online without any further interaction with a business. The new legislation would require businesses that provide free trials or low introductory rates on subscriptions that automatically renew to provide consumers with a notice three to seven days before their free trial or introductory rate converts to a higher, recurring charge. The legislation would also require businesses to provide a link or button that allows consumers to terminate their subscription “immediately” and “without engaging any further steps.”

Assemblyman Berman believes the legislation is most needed now, as consumers are increasingly taking advantage of subscription offers while staying at home during the COVID-19 pandemic. However, recent voluntary efforts by private-market entities achieve the same goal of improving the customer experience with subscription renewals.

For example, on April 18, 2020, Visa implemented a new policy for merchants offering free trials and introductory rates on subscriptions. The Visa policy requires merchants to provide notice to cardholders before their subscription converts to the full price and to include a link to manage their account online. A merchant would not have to provide notice before this conversion if a “regular pricing” schedule that increases over the term of the agreement “has been disclosed to, and accepted by, the cardholder at the time of completing the subscription enrollment.” That is, publishers would not have to take additional steps during the time of a free trial or introductory offer, if notice to and acceptance by the consumer has been addressed up front in the enrollment process. This is a well-reasoned and balanced approach.

The Visa subscription policy, which just took effect two months ago, should be given time to see if it will work, without the added burden of regulation. News publishers and other subscription-based businesses are working hard to improve the customer experience and have already invested significant revenue into making changes to their programs and systems to comply with the new Visa requirements.

As we have seen with other legislation originating in California, AB 2811 could set in motion a patchwork of different state laws, which would increase regulatory costs on news publishers and could potentially stunt the growth of reader revenue at a time when publishers need it the most.

We encourage the members of the California Senate to pause approval of this legislation in order to allow enough time for Visa’s new policy to be implemented and evaluated on whether it has enhanced the customer experience with automatic renewal subscriptions.

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