The Federal Trade Commission, or FTC, has proposed a new “click to cancel” rule that would require businesses to make it “as easy for consumers to cancel their enrollment as it was to sign up.”
This proposed rule is just one of several updates the Commission wants to add to its rules in regard to subscription services and platforms that require recurring payments for access. The new provision, along with the Commission’s other proposals, would serve to save consumers time and energy, stopping the overcomplicated and oftentimes unsuccessful process to cancel unwanted subscription payment plans.
FTC chairwoman Lina M. Khan said, “Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place. 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.”
This new rule is laid out as part of the FTC’s review of its 1973 Negative Option Rule, the rule which they claim combats unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs. The FTC receives thousands of consumer complaints about such practices each year.
As written by the FTC, here are the rules they are looking to implement:
- 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.