Buying Plans and Product Subscriptions

A buying plan, or buying club, is a type of plan that obligates a buyer to purchase items on a set schedule, to buy items that a seller may deliver without notice, or to pay membership fees for the opportunity to purchase at a supposed discount. A typical example could be a plan to buy a book or a movie DVD once a month. The seller usually promises large discounts, and the buyer must "opt-out" of a scheduled purchase, or be charged for it.

If you're thinking about signing up for a buying plan, it's important to fully understand the terms, think about whether you'll save money, and know the cancellation process.

Types of Buying Plans

There are three common types of buying plans:

Buyer knows the item is coming.

The buyer knows that on a certain date, such as the fifteenth of the month, the seller will deliver an item, and the buyer will be charged for it. If the buyer doesn't want an item in any particular period, he or she must let the seller know, and delivery resumes the next period unless the buyer again lets the seller know not to deliver or cancels the plan.

Buyer doesn't know when an item will be coming.

The buyer in these "continuity plans" is not given advance notice of deliveries from the seller. Typically in these plans, the buyer agrees that after a certain number of deliveries or time period, he or she becomes a member of the plan and must pay for future shipments from the seller, whenever they may come.

Buyer is charged a membership fee.

These plans require the buyer to pay a monthly or yearly membership fee, regardless of whether the buyer purchases an item. For example, a buyer may agree to pay $100 a year for the option to buy discounted items from a catalog. Even if the buyer makes no purchases over the course of the year, he or she must pay the membership fee. Often, sellers of these plans entice buyers with a "free" trial period that may come with strings attached.

Buyer Protection

Buyers have certain rights under a regulation known as the Prenotification Negative Option Rule. Some of the Rule's buyer protections include:

• The seller must clearly inform the buyer of the process for refusing an item and for canceling membership.
• The seller must clearly state whether the buyer is obligated to make a minimum number of purchases.
• The buyer has the right to cancel the membership at any time, unless the buyer has agreed to make a minimum number of purchases. If this is the case, the buyer has the right to cancel the membership as soon as that minimum number of purchases is made.
• For plans in which the buyer knows the purchase schedule, the seller must identify the item (for example, the title of the book that will be delivered in a book-buying plan) at least 20 days before delivery. The buyer then has at least 10 days to decide whether to accept or opt-out of this particular delivery.

These are just a few of the buyer protections the Prenotification Negative Option Rule provides. For a more detailed list and explanations, read Findlaw's "Fast Facts for Consumers" article. Note that some states have their own buying plan regulations, such as Iowa and Connecticut.

Things to Consider Before Signing Up for a Buying Plan

A potential buying plan member must fully understand the terms of the plan, such as whether and how membership fees can be increased, whether the buyer must make a minimum number of purchases, the deadline for opting-out of a delivery, and the process for terminating membership.

The buyer should also consider whether he or she will save money. If, for example, a buyer is considering a plan that has a $100 yearly membership fee and that promises a 25% discount on any item, the buyer would have to spend at least $400 during that year to make membership worthwhile.

Beware of scams, pressure tactics, deceptive advertising, and promises of free trial periods or products. If an offer sounds too good to be true, then it just might be.

Getting Help

If you have questions about your rights as a buyer in a buying plan, you can search Findlaw for consumer protection lawyers. If you have a complaint against a seller, you can contact your local consumer agency or file a complaint with the Federal Trade Commission.