New FTC rule simplifies ending subscriptions with just a click
The Federal Trade Commission (FTC) has announced a new "click to cancel" rule to make it easier for consumers to cancel subscriptions. The rule requires businesses to make the cancelation process as easy as the sign-up process. FTC Chair Lina Khan said, "Too often, businesses make people jump through endless hoops just to cancel a subscription," adding that "nobody should be stuck paying for a service they no longer want."
Rule to prevent unwanted charges
The new FTC rule, which will come into effect in the coming months, mandates businesses to seek explicit consent for subscriptions, auto-renewals, and free trials that turn into paid memberships. The commission maintains that canceling these services should be "at least as easy" as signing up. This is part of President Joe Biden's push to eliminate "junk fees" and prevent consumers from being charged for services they no longer need.
Industry response to FTC's action
The FTC's new rule has received mixed reactions. Some trade groups representing news publishers and retailers argue that a multistep cancelation process protects consumers or helps them get a better deal. They claim the new FTC rule places undue burdens on businesses and is unnecessary. However, consumer advocates like Erin Witte, director of consumer protection for the Consumer Federation of America, call the rule a win for both consumers and businesses.
Consumer advocates call for further changes
Teresa Murray, consumer watchdog director at Public Interest Research Group (PIRG), pointed out dubious business tactics like "seemingly endless phone trees that consumers sometimes encounter." She also cited websites where cancelation is meant to be possible but is complicated through a series of unhelpful links. Public Interest Research Group (PIRG) is calling on the FTC to require businesses to send reminders before automatically renewing subscriptions or memberships, and ban strong-arm tactics that dissuade customers from canceling services.
FTC's decision and future implications
The FTC reached its decision after analyzing more than 16,000 comments on the issue. Notably, the agency also chose not to include a proposal that would have mandated companies to send annual reminders to consumers for subscription renewals in the final rulemaking. Witte hoped that "the FTC will revisit this in a future rulemaking or updates to the rule," stressing on businesses reminding customers about their subscriptions.
