Recurring billing has gotten some negative press lately. The FTC and other regulatory bodies have looked into negative option billing or recurring billing continuity programs. There are several payment plans where customers are automatically charged on a recurring billing basis unless the customer specifically chooses to opt out. Consumers have to go through certain procedures to opt out a recurring billing plan if they do not want to pay for a service any longer. If the customer does not opt-out, recurring billing transactions for the product or service continue to appear on the consumer's cards.
There is another type of negative recurring billing which is known as "free-to-pay" conversion. Here, the customer signs up for a "free trial". If the customer does not cancel the subscription of the free trial period, recurring billing for the goods or services automatically kicks in and continues until the consumer cancels.
The problem with both the recurring billing models is that these start with the consent of the customer and don't stop unless the customer takes action to cancel these. And, frequently, customers ignore the small print which contains the terms and conditions of recurring billing But the FTC do not agree with the notion that "silence means consent". Customers have often complained about the recurring billing models that do not provide required information about the terms of the recurring billing. As a result of the current investigations, companies must modify recurring billing offers so that terms and conditions are transparent to consumers.