The-Ethics-of-Negative-Option-Marketing
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The-Ethics-of-Negative-Option-Marketing
The Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-MarketingState University Durant, Oklahoma 74701 580.745.2430FAX 580.755.7485 cvonbergen@sosu.eduThe Ethics of Negative Option MarketingABSTRACTNegative option marketing (NOM), where customers are required to expressly reject unsolicited offerings to avoid being charged for a product or service, is becoming The-Ethics-of-Negative-Option-Marketinga common marketing strategy2The Ethics of Negative Option MarketingVoice on THE Phone: c. J. Nickle Company would like to thank you for your catalog oThe-Ethics-of-Negative-Option-Marketing
rder today. As a token of our appreciation, we would like to send you, free of charge, Northern Living Magazine.Consumer: Great! i really like NortherThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketing. Nickle Company credit curd you used today for your year's subscription. Or, after 3 months you can call 1-800-xxx-xxxx and cancel your subscription to Northern Living and keep the 3 months of issues absolutely free.For cental ics. commerce was simple and straightforward. A merchant would offer a g The-Ethics-of-Negative-Option-Marketingood or service for sale and a consumer would det ide whether or not to buy. Today, with negative option marketing (NOM), commerce can be anything butThe-Ethics-of-Negative-Option-Marketing
simple, and consumers can end up being charged for products or services they never intended to purchase. Simply put, the NOM technique—also known by sThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketingires that the customers act to prevent a sale from taking place. In the past, silence meant no sale, however, under NOM, silence means sale and consumers must act to prevent the sale from taking place (Lamont 1995). Thus, instead of the merchant having to “sell” an individual a product or service, i The-Ethics-of-Negative-Option-Marketingt starts with the assumption that the person already bought it—and it is up to the consumer to contact the merchant and cancel the order if they do noThe-Ethics-of-Negative-Option-Marketing
t want to complete the transaction. It is no longer a world of consumer consent, but consumer rejection. In effect, the NOM practice is based on presuThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketingketing strategies of "negative options" to sell magazines, natural gas. cellular phone service, health club memberships, lawn care contracts and other goods and services (. According to Jean Ann Fox. director of consumer protection lor the Consumer Federation of America, as quoted in the Post articl The-Ethics-of-Negative-Option-Marketinge, "It's no longer a world of consumer consent, but consumer rejection," which puts more pressure on customers. The Post article goes about detailingThe-Ethics-of-Negative-Option-Marketing
various pros and cons of the practice, for both die customers and the marketing companies. Mail-order music and book clubs have been using it for a loThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketinghe subscription period by sending a letter saying that unless you act, we will extend your subscription and charge your account, there arc many other ways dial the negative options are being used or could be used.considers opr-onr to be a weak foim nt consent - one that unfairly purs rhe onus nt ini The-Ethics-of-Negative-Option-Marketingtiative on the wiong parry' and reflects ar hesr a mere token observance of what is perhaps rhe mnsr fundamental principle nt rhe An. We would preferThe-Ethics-of-Negative-Option-Marketing
that organizations adopt an exclusively "positive" or "opt-in" approach - a much more respectful approach whereby individuals would be deemed to have The Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketingvious. A lot of consumers do not notice the negative option, which is usually in small print, in their communications. Other times exercising the "opt-out" requires effort and time from the customer that he or she may not be willing to spend. Thus, by default, the customer stays with the company and The-Ethics-of-Negative-Option-Marketing many times purchases something. The proponents of the strategy say that it results in increased retention rate, convenience to customers and lower coThe-Ethics-of-Negative-Option-Marketing
sts. On the other hand, the detractors of the practice say that it creates customer confusion, is inconvenient, and is unfair.Huffman, Mark (2005, NovThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-MarketingnlThe Columbia Record Club and various “book-of-the-month” clubs were early pioneers of negative option marketing. The hook was an offer of five or ten books or records for free or at a heavily discounted price.By accepting the offer, the consumer agreed to “join” the club and receive regular shipme The-Ethics-of-Negative-Option-Marketingnts of Ollier books or records at the full price, unless the consumer took the “negative option,” telling the company it did not want to receive thatThe-Ethics-of-Negative-Option-Marketing
month’s offering. As you might expect, negative option has been abused as its use has become more prevalent. The widespread use of credit cards and thThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketinge Commission cracked down on negative option abuses, suing nine companies for charging customers’ credit cards for products or services without gaining their express approval. The FTC found the companies, as part of a transaction with consumers, offered “free offers" or “trial offers" of other produ The-Ethics-of-Negative-Option-Marketingcts and sendees, without disclosing that consumers would be billed for additional products or services unless they exercised the negative option.“NegaThe-Ethics-of-Negative-Option-Marketing
tive option marketing is particularly troubling when marketers already have consumers’ credit card or billing account information and can easily chargThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketingompany and charged unless consumers call to cancel,” the FTC’s Elaine Kolish told Congress in November, 2001. But Congress took no action, and in the last four years, negative option marketing has increased, and so has its abuse.According to the FTC, companies selling magazine subscriptions through The-Ethics-of-Negative-Option-Marketingthe negative option are among the worst offenders. In 2001 the FTC logged 204,000 complaints about deceptive magazine sales. Two years later, the numbThe-Ethics-of-Negative-Option-Marketing
er of complaints had more than doubled, to well over 500,000.4https://khothuvien.cori!Magazine publishers are a bit defensive about that. In fact, theThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketingup defends the practice, saying continuous service and automatic renewals also benefit consumers.“The FTC has expressed concern about the disclosures associated with such marketing techniques and ensuring that consumers understand the terms and conditions of the marketing offers. A number of industr The-Ethics-of-Negative-Option-Marketingy groups have established guidelines for advance consent marketing. MPA has created an educational document around one such set of guidelines,” the grThe-Ethics-of-Negative-Option-Marketing
oup said in a statement on its Website.The lengthy MPA document, written in 1998, is a set of “voluntary" guidelines for the independent contractors hThe Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketingght conclude these guidelines are not always followed.Banned in MotownMichigan Attorney General Mike Cox warns consumers in his state to be wary of negative option traps. He says businesses employ them for one simple reason - they work.“Studies show that if a company asks a customer to sign up fora The-Ethics-of-Negative-Option-Marketingnew service or product, less than 15 percent of consumers receiving the solicitation will sign up," Cox said. “On the other hand, if the service or prThe-Ethics-of-Negative-Option-Marketing
oduct is supplied without the consent of the consumer, up to 80 percent of the consumers will be ‘recruited’ into the new service plan.” In Michigan, The Ethics of Negative Option Marketingc. w. Von Bergen Department of Management and Marketing, John Massey School of Business Southeastern Oklahoma S The-Ethics-of-Negative-Option-Marketingr of goods by a shady merchant,” said Allison Pierce, Communications Director for the Michigan Attorney General’s Office.“Thus, a pure negative option arrangement is no good under contract law, and a bill for the goods involved is deceptive and violates various laws, including the Michigan Consumer The-Ethics-of-Negative-Option-MarketingProtection Act and state and federal unsolicited merchandise laws.”Even though negative option marketing is considered illegal in Michigan, consumersThe-Ethics-of-Negative-Option-Marketing
in that state still fall victim to the system’s abusive practices. Clarence, of Pleasant Lake, Michigan complained to ConsumerAffairs.com about an unaGọi ngay
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