WASHINGTON, D.C. — Consumers aggravated with the sometimes difficult process of canceling subscriptions or memberships received some help Wednesday from the Federal Trade Commission.
The FTC announced it has approved by a 3-2 vote a “click-to-cancel” rule which will require sellers to make it as easy to cancel enrollment for a service as it was to sign up. A news release from the FTC says the rule will go into effect 180 days after it’s published in the Federal Register.
The rule should make it easier for consumers to cancel services such as digital streaming, cable TV, gym memberships and subscriptions to publications. The FTC has released a fact sheet outlining the new rule.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Chair Lina Khan said in a statement. “The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
According to Yahoo! Finance, research shows the average American has 4½ subscriptions and pays $924 annually for those services. Streaming is the most popular type of subscription.
The commission received more than 16,000 comments from consumers, federal and state government agencies, consumer groups, and trade associations after it announced last year it was considering the “click-to-cancel” rule.
The final rule will prohibit sellers from:
- Misrepresenting any material fact made while marketing goods or services with a negative option feature. A negative-option feature is “a term or condition that allows a seller to interpret a customer’s silence, or failure to take an affirmative action, as acceptance of an offer,” according to Deadline.
- Failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative-option feature.
- Failing to obtain a consumer’s express informed consent to the negative-option feature before charging the consumer.
- Failing to provide a simple mechanism to cancel the negative-option feature and immediately halt charges.
“The rule makes it clear that it has to be as easy to cancel a subscription as it is to sign up,” Laura Brett, vice president of the National Advertising Division of BBB National Programs, tells CNN. “That means it’s got to be easy to find where to cancel and how to cancel, and that you never have to interact with a live person in order to cancel the subscription.”
The FTC says the new rules is part of its ongoing review of the 1973 Negative Option Rule. The commission says it receives thousands of complaints each year about recurring-subscription practices and that they have been increasing steadily since 2019.
