Negative Option Schemes

April 08, 2014

For your information, the BBB reports that a Negative Option Marketing is a technique used by a seller to bill a consumer for an unsolicited service unless the consumer informs the seller he/she doesn't want the service. Negative Option Marketing does not include the delivery of, or provision of access to, books, magazines, newspapers or petroleum products.

The legislation requires businesses to fully disclose the type and price of a new service and obtain the consumer's permission before demanding payment for an unsolicited service. The legislation relieves consumers of any liability to pay unless they specifically agree to purchase the services offered through a
negative option. The responsibility is put back on businesses to obtain the consumer's permission.

Businesses which do not comply with the ACT may be required to pay the consumer a penalty of three times the amount owing or $100, whichever is greater.

Detailed information on the type and the price of the service must be disclosed to consumers within 60 days of providing an unsolicited service. Businesses cannot demand payment for the service without the consumers oral or written permission. Businesses may be subject to fines of up to $100,000 for not
disclosing the full details of a negative marketing offer within the 60-day time period.

Beware that mortgage renewals and roll-overs of investments like RRSPs are not included. These services are not considered a negative marketing practice because they are not new or unsolicited services.