The FTC Negative Option Rule affects all subscription businesses. Learn what compliance requires, common pitfalls, and how to structure recurring billing that processors accept.
Subscription and recurring billing models are flagged as high-risk by payment processors due to elevated chargeback rates. The FTC's Negative Option Rule imposes specific compliance requirements that, if violated, can result in account termination.
The Negative Option Rule requires that subscription merchants clearly disclose all material terms before obtaining billing information, obtain express informed consent, and provide a simple cancellation mechanism.
"FTC enforcement actions against subscription businesses have resulted in fines exceeding $100 million for egregious violations."
No. One clear consent at signup covers recurring charges, but you must notify customers of any material changes (price increases, frequency changes) before they take effect.
Consequences include FTC enforcement actions, processor termination, chargeback spikes, and potential class action lawsuits. Compliance is not optional.
Yes. California, Florida, and other states have additional requirements beyond federal law. Always consult legal counsel for multi-state operations.
Cybin Enterprises is a payment services intermediary specializing in high-risk merchant accounts. Our team brings decades of experience in payment processing, compliance, and risk management.
Expertise: High-risk underwriting, payment compliance, chargeback management, multi-processor routing
Understanding the factors that classify a business as high-risk is the first step to securing stable payment processing.
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Whether you're dealing with account termination or launching a new high-risk business, we can help you secure stable payment processing.
