FTC Seeks Comments on Rental Housing Fees and Negative Option Marketing

On March 13, the Federal Trade Commission (FTC) published two Advance Notices of Proposed Rulemaking (ANPRMs) seeking public comment on potential new rules addressing unfair or deceptive acts and practices (UDAP) in the rental housing market and negative option marketing practices, such as subscriptions and automatic renewals. The rental housing fee ANPRM follows a series of enforcement actions against major rental providers in which the FTC alleged that the companies excluded mandatory fees from advertised rent. The negative option ANPRM restarts a rulemaking process that was disrupted last summer when the Eighth Circuit vacated the FTC’s 2024 Click-to-Cancel rule on procedural grounds. Comments on both ANPRMs are due by April 13.

Negative Option Rule

Background

A “negative option” is any sales arrangement in which a seller interprets a consumer’s silence or failure to take action as acceptance of an offer. These arrangements generally fall into four categories: (1) prenotification plans (such as product-of-the-month clubs), (2) continuity plans (such as recurring deliveries), (3) automatic renewals (such as magazine or software subscriptions) and (4) free-to-pay conversion offers (such as free trials that convert to paid subscriptions).

The FTC’s existing Negative Option rule was adopted in 1973 and applies only to prenotification plans. It does not reach most types of modern negative option marketing. Beyond the rule, negative option practices are governed by a patchwork of federal and state laws. Section 5 of the FTC Act allows the FTC to challenge unfair or deceptive practices but requires case-by-case enforcement. The Restore Online Shoppers’ Confidence Act (ROSCA) contains disclosure, consent and cancellation requirements but applies only to internet transactions. The Telemarketing Sales Rule (TSR) addresses negative option offers made over the telephone but does not cover other channels. At the state level, numerous automatic renewal laws impose varying requirements depending on jurisdiction. As a result, no single federal authority provides comprehensive coverage of negative option practices and different legal standards may apply to the same business depending on the marketing channel and the consumer’s location.

2024 Click-to-Cancel Rule

In October 2024, under the leadership of then-FTC Chairwoman Lina Khan, the FTC finalized amendments that would have expanded the Negative Option rule to cover all negative option programs across all media. The amended rule, commonly referred to as the Click-to-Cancel rule, imposed four core requirements: (1) a prohibition on misrepresentations, (2) a requirement to disclose all material terms before obtaining billing information, (3) a requirement to obtain the consumer’s express informed consent before charging and (4) a requirement to provide a cancellation mechanism at least as easy to use as the enrollment process. In July 2025, the Eighth Circuit vacated the amended rule, holding that the FTC had failed to conduct the preliminary regulatory analysis required under the FTC Act. In their ruling, the court reinstated the original 1973 rule, and the FTC, under new leadership, did not appeal. Following the Eighth Circuit ruling, Sen. Ruben Gallego (D-AZ) and Rep. Brad Sherman (D-CA) introduced the Click to Cancel Consumer Protection Act (S.2254 / H.R. 4819), measures that would codify the 2024 click-to-cancel rule. Neither bill has been considered in committee or on the House or Senate floor.

2026 Negative Option ANPRM

The ANPRM notes that the FTC received more than 100,000 complaints related to negative option practices over the past five years, with complaint rates rising from approximately 33 per day in late 2020 to more than 90 per day in 2025. Since January 2025, the commission has brought five enforcement actions and approved six settlements involving alleged negative option misconduct. The commission argues that the recent increase in complaints combined with the current patchwork of federal and state laws necessitates an FTC rulemaking to remedy the situation. The ANPRM is seeking broad input across five areas:

1. General Questions About the Current Rule
   
   This section of the ANPRM asks whether the current 1973 rule adequately protects consumers, whether it should be expanded beyond prenotification plans, and what regulatory alternatives the commission should consider, including retaining the current rule, adopting provisions from the Click-to-Cancel rule, developing different provisions or pursuing nonregulatory alternatives such as consumer and business education.
   
2. Marketplace for Negative Option Programs
   
   This section seeks information on how negative option programs are structured, marketed and administered across industries. The commission requests quantitative data, including enrollment volumes, cancellation times by method, total revenue figures, average pricing and data on consumer spending on programs that go unused. The section also asks about whether third parties, including payment service providers, are involved in enrolling customers into a business’s negative option program.
   
3. Unfair or Deceptive Practices
   
   This section asks commenters to identify practices that prevent consumers from understanding program terms, result in enrollment without express informed consent or deter cancellation. The section also asks about the use and impact of “saves” offers made to consumers attempting to cancel. The FTC asks which unfair and deceptive practices are “prevalent” in the marketplace, a legally significant threshold that the commission is required to meet before promulgating a UDAP rule.
   
4. Specific Rule Provisions
   
   This section states that the FTC may consider portions of the Click-to-Cancel rule in its new rule. The section asks commenters to address the costs and benefits of specific requirements that could appear in a revised rule, including the costs that adopting provisions from the Click-to-Cancel rule would impose on businesses. The section also seeks input on compliance burdens under existing law, incremental costs of new requirements and differences by industry and firm size.
   
5. Exemptions
   
   This section asks about the possibility of exemptions from the rule being granted to certain industries or businesses. The FTC asks whether exemptions should cover entire industries or only individual businesses, whether a new rule should only apply to certain industries, and whether business-to-business (B2B) transactions between sophisticated entities should be treated differently. The FTC previously took the position that the Click-to-Cancel rule covered B2B transactions and subjected them to the same requirements as consumer transactions.

Rental Housing Fee Practices

Background

In December 2025, the FTC issued a final rule to limit certain industries’ use of so-called “junk fees,” concluding a rulemaking process that began in 2022 and ultimately drew over 72,000 public comments. The final rule was narrowly tailored to the live-event ticketing and short-term lodging industries, requiring that those businesses advertise the “full price” of a good or service before final payment.

As part of the final rule’s limited scope, financial services and housing providers fell outside of the definition of a covered business and were not subject to the rule. The final rule highlighted thousands of comments from the rental housing industry, stating that it is not possible to predict and disclose total prices and fees that residents could incur during the term of their lease. The final rule also clarified that rental housing providers do not qualify as short-term lodging under the definition of a covered good or service. The exclusion of housing and financial services providers was a significant change from the FTC’s proposed rule, which provided the commission with broad UDAP authority to police the marketplace across many industries.

As cited in the 2026 rental fees NPRM, the FTC has filed two cases challenging unfair and deceptive fee practices by major rental housing providers in the last two years, including a $48 million settlement following allegations that a company excluded mandatory monthly fees from advertised rent, failed to disclose mandatory fees and unfairly withheld security deposits. In December 2025, the FTC and the state of Colorado settled a lawsuit against a residential property manager for $24 million over allegations that the defendant misrepresented the true cost of renting by advertising base rents that excluded mandatory fixed monthly fees. Both settlements require the companies to prominently advertise total rent, including all mandatory fees, and to disclose all fees before accepting payment.

The ANPRM

The FTC states in the ANPRM that case-by-case enforcement addresses only some aspects of harmful rental fee practices. The commission explains that practices like those challenged in the two enforcement cases appear to be prevalent across the industry and may require a rulemaking to act as a “deterrent” against similar practices. The commission states that a rule on unfair or deceptive rental housing fee practices would allow the FTC to seek civil penalties and more easily obtain consumer redress. This ANPRM could impact multifamily housing providers, institutional landlords, apartment operators and other housing providers.

The ANPRM identifies several categories of practices the commission is examining:

• Failing to disclose or misrepresenting the total rent for a unit, including all mandatory fees or charges.
• Failing to disclose the nature, purpose, amount or refundability of fees or charges.
• Misrepresenting mandatory fees as optional or vice versa.
• Billing consumers for fees or services without express informed consent.
• Imposing charges for services that providers are legally obligated to provide or that consumers would reasonably expect to be included in rent.
• Restricting consumer choice by requiring renters to use designated service providers.

The ANPRM contains more than 70 specific questions organized into two sections. The first section asks about the structure and practices of the rental housing market. The FTC seeks information on the roles of property owners, managers, software providers, listing services and online platforms in setting, advertising and collecting rent and fees, and asks what technological barriers may prevent providers from advertising total rent. The ANPRM asks about the types, prevalence and amounts of mandatory and optional fees imposed on renters, noting that mandatory fees “go by many different names” and listing more than two dozen examples, including amenity fees, technology fees, administrative fees, pest control fees and utility-related fees, among others. A 2025 report cited in the ANPRM found that more than 70% of renters reported paying at least one mandatory fee aside from their monthly rent.

The ANPRM asks questions about application fees and security deposits, including whether application fees exceed the actual cost of processing applications, whether fees are charged for units that are already reserved by another renter, and what criteria providers use to determine security deposit refundability. The ANPRM also asks about variable and contingent costs, including whether it is feasible to include actual or estimated utility expenses in total rent and how providers calculate charges under ratio utility billing systems (RUBS). The ANPRM asks when and how fees are disclosed to renters, whether providers use lease cover sheets listing all applicable fees, and how common it is for providers to impose new mandatory fees or convert optional fees to mandatory ones after a renter has already signed a lease.

The second section of questions contemplates whether a new, standalone rule is needed and solicits input on specific requirements, including whether the commission should require total rent disclosures incorporating all mandatory fees whenever consumers are quoted a price, how to treat fees that are variable or contingent, and what the costs and benefits of such requirements would be for providers of varying sizes and types. The ANPRM also asks whether alternatives such as consumer education or public workshops should supplement or replace the rulemaking.

Next Steps

While these announcements do not impose new legal requirements, they signal issues the FTC will likely prioritize in future rulemaking and enforcement. Rental housing providers, property management software companies, listing services and online rental platforms should consider submitting comments on the Rental Housing Fee Practices ANPRM. Businesses that rely on subscription models, automatic renewals or other negative option programs should monitor the rulemaking closely and consider submitting comments, particularly on possible exemptions, the treatment of B2B transactions and the costs and benefits of particular regulatory requirements.

Separately, the Consumer Financial Protection Bureau’s (CFPB) Spring 2025 Unified Agenda indicates that the bureau is considering a rulemaking to define unfair, deceptive, or abusive acts or practices (UDAAP) under the Dodd-Frank Act. The CFPB has historically declined to define UDAAP through regulation, so such a rulemaking could provide greater clarity for housing and financial services market participants. Stakeholders should monitor both the FTC and CFPB proceedings, as developments at either agency could shape the regulatory landscape for fee transparency and consumer protection across multiple industries.

The Brownstein Financial Services and Government Relations teams are ready to assist with drafting comments, garnering support, compliance and outreach related to these ANPRMs.

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