73 Am. U. L. Rev. 1611 (2024).

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Abstract

Worldwide, the “subscription economy” has exploded in recent years, especially among online sellers of consumer goods and services. Although these subscriptions use various contract forms, many have one common feature: the negative option. With a negative option contract, once a consumer has signed up, the contract will continue until the consumer actively reaches out to cancel it. These are wildly popular among sellers, as they create continuous income and put inertia on the sellers’ side. Unsurprisingly, then, consumers complain in great numbers about being trapped in agreements that are easy to sign up for but seemingly impossible to cancel. Even worse, consumers pay—sometimes for years—for scams or marginal “subscriptions” that they never meant to sign up for in the first place.

Governments around the globe have scrambled to respond (with mixed success) to this wave of complaints. This Article surveys that landscape, assessing the consumer risks and benefits of negative option contracts, cataloging the regulatory responses across countries, and taking stock of why much of that regulation falls short (especially when it focuses on consumer disclosures). We propose a new model law that retains essential consumer disclosures but affords greater substantive protections for consumers. In particular, the model law would prevent free trials from rolling over into paid negative option contracts, extend the cancellation periods for automatically renewed contracts, and require sellers to stop charging consumers who have stopped using their services (or eliminate automatically renewing term contracts altogether). With negative option contracts and consumer discontent on the rise, now is the moment to take stock of best practices and shore up protections for consumers worldwide.

* Associate Professor, University of Maine School of Law; Professor of Law, University of Minnesota Law School. The authors thank the organizers, commentators, and participants in the 2024 Consumer Law Scholars Conference at Berkeley Law, and especially Christoph Busch. We owe tremendous thanks to Loren Turner, International Law Librarian at Minnesota Law, as well as Evan Dale for excellent research assistance. We also thank the editors of the American University Law Review for their diligent and thoughtful efforts. Any errors, of course, remain ours.