A new “click-to-cancel” rule, easing the process of canceling consumer subscriptions and memberships, was announced by the Federal Trade Commission (FTC) on Wednesday.
For many, the frustration of trying to cancel a gym membership or meal kit delivery subscription is extremely familiar. The usual practice of some companies has been to make signing up for a membership or subscription as easy as can be, while canceling that same subscription entails a maze of obstacles. The FTC’s new rule, announced after more than 16,000 public comments, aims to make canceling these subscriptions as easy as they are to start.
According to the FTC’s fact sheet on the rule, sellers must make important information truthful, clear, and easy to find. Consumers need to know what they are agreeing to before they sign up and sellers must be able to prove this fact. It also must be as quick and easy to cancel as it was to sign up. If a person signs up for a subscription or membership online, they must be able to click to cancel. If they signed up in person, they must be able to cancel online or over the phone. Most of the rule’s provisions will go into effect 180 days after it is published in the Federal Register.
The FTC says that the number of complaints about negative option and recurring subscription practices has steadily increased, resulting in about 70 consumer complaints per day on average in 2024.
At least two proposed aspects of the new rule were dropped during the process. The rule does not include a requirement that sellers provide yearly reminders about the negative option feature of the subscription or a requirement that sellers not tell canceling consumers about plan modifications or reasons to keep their existing agreement without first asking if they’d like to hear those things.
FTC Chair Lina Khan said in an interview about the new rule, “The pandemic brought to the surface just how businesses are making people jump through endless hoops,” noting the “absurdity” of continuing to require in-person cancellations when the businesses themselves were closed.
Additional Reading
Federal Trade Commission Announces Final “Click-to-Cancel” Rule Making It Easier for Consumers to End Recurring Subscriptions and Memberships, Federal Trade Commission (October 16, 2024)
Fact Sheet: The FTC’s “Click to Cancel” Rule
Canceling subscriptions has to be as easy as signing up, the FTC says in a new rule, NPR (October 16, 2024)
FTC takes on subscription traps with ‘click to cancel’ rule, Reuters (October 16, 2024)
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