Few things are more annoying than realizing that, once again, you've been trapped in the cycle of self-renewing subscriptions. The Federal Trade Commission has come up with a "click to cancel" solution that would make it as easy to unsubscribe as it was to sign up in the first place.
“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” said FTC Chair Lina M. Khan. “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”
The new click to cancel provision, along with other proposals, would go a long way to rescuing consumers from seemingly never-ending struggles to cancel unwanted subscription payment plans for everything from cosmetics to newspapers to gym memberships, the FTC said.
The current patchwork of laws and regulations don't provide consumers and industry with a clear roadmap that protects consumers to get out of gym memberships, subscriptions, recurring cosmetic orders and other annoyances. The notice of proposed rulemaking announced Thursday is intended to fix that.
Negative Option Rule
It's part of the FTC’s ongoing review of its 1973 Negative Option Rule, which the agency uses to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs.
While many of these programs are worthwhile, others make it difficult to cancel when the consumer tires of the service or finds it doesn't live up to its claims. Many marketers fail to make adequate disclosures, bill consumers without their consent, or make cancellation either difficult or impossible—such as by requiring customers to cancel in person or keeping them stuck on hold waiting to talk to customer service. Each year, the FTC receives thousands of consumer complaints about such practices.
The proposal would make several specific changes, including implementing:
- A simple cancellation mechanism: If consumers are unable to easily leave any program when they want to, the negative option feature becomes nothing more than a way to continue charging them for products they no longer want. To address this issue, the proposed rule would require businesses to make it at least as easy to cancel a subscription as it was to start it. For example, if you can sign up online, you must be able to cancel on the same website, in the same number of steps.
- New requirements before making additional offers: The proposed rule would allow sellers to pitch additional offers or modifications when a consumer tries to cancel their enrollment. But before making such pitches, sellers must first ask consumers whether they want to hear them. In other words, a seller must take “no” for an answer and upon hearing “no” must immediately implement the cancellation process.
- New requirements regarding reminders and confirmations: The proposed rule would require sellers to provide an annual reminder to consumers enrolled in negative option programs involving anything other than physical goods, before they are automatically renewed.
The FTC has developed a fact sheet summarizing the proposed changes to the Negative Option Rule.