Negative Option Billing

While federal regulations do not apply to credit unions, Market Code looks to the regulations as being an industry standard. Market Code provides guidance based on the principles of the regulations. The information regarding “negative option billing” incorporates Market Code practices, which credit unions follow.

Negative option billing is a business practice in which unsolicited goods and services are provided automatically and where the member/customer must either pay for the service or specifically decline it in advance of billing.

Credit Unions do not practice negative option billing and must always obtain consent prior to charging for a new optional product or service. Several common optional services/products provided are:

• Optional loan insurance
• Overdraft protection
• Fraud alerts
• Optional credit card insurance

Members/customers may agree to sign up for optional services or products verbally or in written form, on paper or electronically. Before the agreement is received, the credit union should be certain to provide a summary (verbally or in writing) to the member/customer that contains the following information about the product or service:

• A description of the product or service
• The terms of agreement
• How to cancel the product or service
• All related fees and costs, including information as to how the fees will be calculated
• An example to illustrate the method (where applicable)

When consent is received verbally, the credit union should provide written confirmation to the member/customer of this consent as quickly as possible.