CONSUMER ALERT

MIKE COX
 ATTORNEY GENERAL

The Attorney General provides Consumer Alerts to inform the public of unfair, misleading or deceptive business practices, and to provide information and guidance on other issues of concern.

IF YOU DIDN'T ASK FOR IT, YOU DON'T HAVE TO BUY IT
 

Businesses across America are forever inventing new ways to market goods and services. Many of these marketing techniques, such as telemarketing, can be frustrating and annoying to the consumer but they are not necessarily illegal. On the other hand, as Attorney General, I have to be vigilant to ensure that the sales practices of businesses stay within the bounds of law and do not unfairly or deceptively trap the consumer.

One new marketing technique in particular is being used by more and more companies because it has proved so effective in selling products and services to the unwary consumer. This practice, known as "negative-optioning," consists of sending consumers products or services on a regular basis, typically monthly, without the consumer requesting the goods and services or consenting to their delivery.

It works like this. A lawn care company may call you at home to "tell you about their lawn maintenance plan." Without your consent, they begin to apply fertilizers and pesticides to your lawn periodically and, of course, bill you for this service. The bill or invoice might say that if you want to cancel this service, you must call them to tell them that you no longer want the fertilizers and pesticides applied to your lawn. If you don't call, the lawn care services will continue, and so will the billings.

Another example that occurred recently in Michigan involved a cellular phone company. The phone company notified its customers that they would get three months of free "road service protection," but at the end of the three months would pay $2.95 a month for the road service protection plan.

These are both examples of "negative-optioning" where the consumer has to take action to cancel the goods or services. Negative-option marketing techniques are tremendously effective. Studies show that if a company asks a customer to sign up for a new service or product, less than 15 percent of consumers receiving the solicitation will sign up. On the other hand, if the service or product is supplied without the consent of the consumer, up to 80 percent of the consumers will be "recruited" into the new service plan.

The Attorney General has informed these companies that negative option marketing practices are illegal in Michigan and have directed them to cease and desist these activities. An offer for goods and services cannot be legally accepted by the silence of the party being offered the goods or services. Therefore, no binding contract is formed. If you start receiving services or goods on a regular basis, you should do the following:

• Write or call my Consumer Protection Division to file a complaint against the company (you can obtain a complaint form from our website):
  
  

• If you have been contacted at your home by a company that begins to provide a service to you and you have not signed a contract for the service, you don't have to pay for it.
• Refuse to pay for the service unless you have entered into a contract for it.

Certain companies provide goods or services periodically that may appear to be "negative-optioning" but are perfectly legal. For instance, book clubs or record clubs may send you books and records unless you affirmatively return a card instructing them that you do not want the items. This marketing practice is lawful because before such products are provided for the first time, the consumer must sign a contract consenting to the marketing practice.