FTC lays out new ‘Click to cancel’ rules for subscriptions

The US Federal Trade Commission has proposed several changes that it says will make it easier for consumers to cancel recurring subscriptions and memberships. The FTC believes that its “Click to Cancel” provisions “will go a long way in saving consumers from the seemingly never-ending struggle to cancel unwanted subscription payment plans.”

While the FTC currently has “a variety of laws and regulations at its disposal to protect consumers,” they “do not provide consumers and industry with a coherent legal framework.” So here is a breakdown of the specific changes the FTC is proposing:

Simple Cancellation Mechanism: If consumers can’t easily exit a program whenever they want, the negative opt-out feature becomes nothing more than a way to keep charging them for products they no longer need. To address this issue, the proposed rule would require companies to make canceling a subscription at least as easy as starting one. For example, if you can register online, you should be able to cancel your subscription on the same website in the same number of steps. New requirements before making additional offers. The proposed rule would allow merchants to offer additional offers or modifications when a consumer attempts to cancel their registration. But before making such claims, salespeople must first ask consumers if they want to hear them. In other words, the seller must take “no” for an answer and, upon hearing “no”, must immediately go through the cancellation process. New Reminder and Confirmation Requirements: The proposed rule would require merchants to provide an annual reminder to consumers participating in negative option programs involving anything other than physical goods prior to their automatic renewal.

These changes will have a wide impact but are likely to affect a number of different online services and subscriptions, including apps available on the App Store. This will also affect other subscription and membership services such as gym memberships.

“Some companies all too often trick consumers into paying for subscriptions they no longer need or didn’t originally subscribe to,” said FTC Chair Lina M. Khan. “The proposed rule would require companies to make it easy to unsubscribe, as well as subscribing to it. The proposal will save consumers time and money, and businesses that continue to use subscription gimmicks and traps will face severe penalties.”

The FTC will begin commenting on these proposals shortly before any further changes are made.

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