Subscription marketing is on the rise with some predicting the subscription industry will more than double by 2025. This prediction is fueled partly by the pandemic, no doubt linked to people seeking more streaming services to fill our entertainment needs and for home workout subscriptions to get our sweat on safely. Experts do not forecast this growth will taper off, as it is part of a larger trend of relationship-based marketing. We were quite intrigued by weekend headlines touting a Taco Bell subscription: For $10, one can get a taco a day for 30 days. The offer requires customers to first join the loyalty program and download the app before they can sign up for the taco subscription. What was really interesting to us was that unlike most subscription offers, this one does NOT automatically renew, but expires after 30 days. This makes sense considering that Taco Bell would lose money if everyone got a taco a day, though Taco Bell is likely assuming that, just as with Lay’s potato chips, nobody can eat just one a day. Increased visits from subscribing customers would drive additional sales. Or perhaps the goal was really to drive app download and loyalty signups. But the limited nature of this offer certainly relieves many headaches that marketers have over most subscription programs, which have the negative option feature. With the FTC’s recent Enforcement Policy Statement Regarding Negative Option Marketing and the myriad of state law updates, it is a good time to take a fresh look at how you add subscribers and how you implement your program. For example:

  • Make sure material terms are conspicuous and in immediate proximity to the consent mechanism.
  • Limit the material terms to what is critical to the negative option – that the charge recurs until it is cancelled, its term, its price, how to cancel. Do not include other disclosures here.
  • Use a checkbox or similar affirmative act that is separate from the consent to the transaction.
  • Place the disclosure and consent mechanism prior to where the customer enters billing information.
  • Make sure you offer means to cancel that mirror the means to sign up – typically this requires an easy online method of cancellation (e.g., a direct link or button prominently located in the user’s online account page).
  • Strip out save-a-sale efforts and allow customers to simply cancel.
  • Send reminder notices when required by state law – previously, this requirement primarily applied to annual contracts, but new state laws have broadened the scope. A good rule of thumb is to send a reminder notice 30 days prior to the renewal that will continue the subscription for more than a year.
  • In some states, programs that start with a free trial and convert to a paid program are required to send notice prior to the first billing with a link to cancel.