The Federal Trade Commission (FTC) has announced its finalized method for simplifying subscription cancellations called “click-to-cancel”. This new regulation seeks to shield users from companies that deliberately make subscription cancellations tedious or unattainable.
The FTC’s chairperson, Lina M. Khan, spoke on business practices where consumers are forced to go through numerous hurdles just to put an end to a subscription. She stressed the significant role of FTC’s new rule in putting a halt to such practices, ultimately allowing Americans to save their resources and time. The aim is to ensure that no consumer is burdened with the cost of a service they no longer desire.
This alteration comes as part of broader efforts by the FTC to update the 1973 Negative Option Rule. This update is strategic in the battle against duplicitous and unjust practices affiliated with subscriptions and memberships. The FTC informs that in the last half-decade, complaints regarding repetitive subscription practices have been on a steady incline. In 2024 alone, the FTC was on the receiving end of almost 70 consumer complaints daily, registering an increase from 42 per day in 2021.
The impact of the click-to-cancel rule, which is anticipated to be active in about half a year, might cause serious repercussions for many digital retailers. This includes Amazon, service providers on the internet like Netflix, and even more traditional subscriptions such as The New York Times Co. The forthcoming rule necessitates companies acquire approval for subscriptions, automatic renewals, and free trials that change to paid memberships. Additionally, they must make the process of cancelling their subscription as uncomplicated as it was to register.
During its prior undertakings, the FTC has flagged Amazon’s business practices, asserting that the company enrolled consumers into its Prime subscription service without attaining their explicit permission. It was then reported that the cancellation process of the Prime subscriptions was made complicated. Several other large retailers’ subscription services, including Walmart, Inc. and Best Buy Co., Inc., have faced similar scrutiny from the FTC.
Planet Fitness, Inc., renowned for frequently difficult-to-cancel gym memberships, was put under the spotlight after FTC Chair Kahn tweeted about the company. She referred to a complaint about Planet Fitness’s cancellation process and emphasized that businesses need to ensure signing-ups are transparent, have consent, and are easy to cancel in compliance with the law.
In conclusion, the new “click-to-cancel” rule can be seen as a gain for consumers against businesses with deceptive and unfair subscription practices. By forcing these businesses to ensure registration is consensual and as easy to cancel as it was to sign up, consumers are provided a much-needed level of protection. Furthermore, with companies being mandated to get consent before proceeding with subscriptions, auto-renewals, and free trials that convert to paid memberships, consumers will have better control over their subscription-based commitments. This shift in policy marks a significant step towards modernizing the rules of trade and improving the industry’s standard for fairness and transparency. It’s an encouraging reminder that regulatory bodies can and do play a crucial role in protecting consumers’ rights.