What to know about new FTC rule making it easier to cancel subscriptions and memberships

October 16, 2024 3,825

FTC wants to make cancelling subscriptions easier

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The Federal Trade Commission on Wednesday announced it has finalized a proposal known as “click to cancel” that requires companies to make it just as easy to cancel a subscription or service as it is to sign up for it.

The agency said it gets about 70 complaints a day about charges for subscriptions that are too difficult to cancel or that people did not realize they had signed up for to start with.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Commission Chair Lina Khan said in a news release. “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.”

FTC commissioners passed the final rule on a 3-2 vote.

Fact sheet on FTC’s “Click to Cancel” rule.

Federal Trade Commission

The White House in August said it was looking to combat the often complicated and difficult process to cancel cable subscriptions, gym memberships or other services, part of a broader effort to address common consumer complaints.

The final “click to cancel” rule prohibits sellers from:

misrepresenting any material fact made while marketing goods or services with a negative option feature;

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; and

failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.

When does “click to cancel” take effect?

Most of the provisions take effect 180 days after the rule is published in the Federal Register, according to the FTC.

What’s not to like?

The U.S. Chamber of Commerce opposes the governmentwide initiative, including the FTC’s new subscription rule, accusing the agency on Wednesday of trying to “micromanage business decisions.” The group argues the latest move would increase costs for consumers.

The White House reiterated its support for the rule, issuing a statement on Wednesday from National Economic Adviser Lael Brainard, who called it part of the Biden-Harris administration’s “action to lower costs for consumers.”