Legal Brief: Changes to FTC’s Negative Option Rule May Impact Security
June 9, 2023
Security Business Magazine
Types : Bylined Articles
FTC considers consumer protection enhancements when it comes to recurring payments.
John and his wife have been loyal customers of Security Company X for nearly 20 years; however, a few months ago, John commenced a major renovation to his home that resulted in substantial disruption to the functionality of the monitored security system. This prompted John to contact Security Company X and cancel the service.
Hoping to retain their customer, Security Company X suggested that John not cancel his service, but instead suspend it for a six-month period. John agreed, resolving that he could defer the decision to continue with Security Company X after the renovation was complete.
Six months later, the renovation was far from complete. A few days after the six-month point, John contacted Security Company X to cancel or at least extend the suspension. To his great surprise and dismay, he was advised that, because he called after the suspension was lifted (it was set for six months precisely), he was responsible for a quarterly payment to Security Company X. The home was not in a condition to receive the service. John got no advance notice or warning from the security company that this was happening.
Should John have called Security Company X before the expiration of the suspension? Ideally, yes; however, the more pertinent question from a legal and consumer protection perspective, is whether Security Company X should have given John advance notice that the suspension was set to be lifted. At a minimum, that would have inspired John to extend the suspension and avoid the cost.