The Federal Trade Commission (FTC) issued proposals to make it easier for consumers to cancel ongoing subscriptions without jumping through hoops.
The FTC is proposing a “click to cancel” rule for things like gym memberships, newspapers, food delivery and other services that charge weekly or monthly fees.
“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” said FTC Chair Lina M. Khan. “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.”
The rule changes are part of the FTC’s review of the negative option rule. The federal government defines a negative option as one that “allows a seller to interpret a customer's silence, or failure to take an affirmative action, as acceptance of an offer.”
The current negative option rule, advocates say, is too narrow.
“Negative option plans refer to any situation where the customer is presumed to continue to accept an agreement or offer unless they affirmatively decline it,” Khan said in a statement. “This structure can be harmless, and can even benefit consumers, when properly disclosed. Problems arise when businesses manipulate consumers away from taking that affirmative step, which can result in customers paying for things they don’t want or need.”
Among the rule changes, the FTC would require businesses to make it at least as easy to cancel a subscription as it was to start it. Essentially, if you can sign up for a membership with one click, it would be just that simple to cancel the membership.
A new rule would continue to allow sellers to pitch additional offers or modifications, but sellers would be required to ask the customer if they want to hear the pitch. If the customer says “no,” the seller must begin the cancellation process.
It would also require sellers to make annual reminders and confirmations for non-physical items that are renewed each year.
The rules can go into effect after a public comment period.
The publication of the proposed rules was approved by a 3-1 margin by the FTC. Commissioner Christine S. Wilson was the lone no vote.
“The proposed Rule the Commission announces today may achieve the goal of synthesizing the various requirements in one rule – but it also sweeps in far more conduct than previously anticipated,” Wilson said. “The broadened scope of the Rule would extend far beyond the negative option abuses cited in the ANPR, and far beyond practices for which the rulemaking record supports a prevalence of unfair or deceptive practices.”