How much money have you lost from forgetting to cancel an online subscription following its free trial? Or from getting frustrated while trying to figure out how exactly to end a recurring charge, pledging to do it later, and then subsequently not getting around to it? Don’t feel bad—the Federal Trade Commission sympathizes. And they are trying to do something to ease the pain.
On Thursday, the FTC announced a new “click to cancel” rule provision proposal to simplify the process of ending subscriptions and memberships for consumers. The potential reforms come as regulators are reexamining their 1973 Negative Option Rule, which is often utilized by the agency to push back against companies’ often deliberate tactics to obfuscate the ways in which customers can voluntarily end subscriptions.
[Related: The FTC is trying to get more tech-savvy.]
“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 in the official statement, adding that the new proposal will save consumers money and time while enabling regulators the ability to issue penalties to businesses for “subscription tricks and traps.”
Arguing the “current patchwork of laws and regulations available to the FTC do not provide consumers and industry with a consistent legal framework,” regulators are suggesting three major changes:
- Requiring a simple mechanism making it as easy to cancel a service’s account as it is to sign up for one, and in “the same number of steps.”
- While still allowing businesses to pitch additional offers or subscription modifications during the cancellation process, those opportunities can only be given after presenting users with a clear means to opt-out of paid memberships.
- Requiring sellers to offer consumers annual reminders enrolled in “negative option programs involving anything other than physical goods, before they are automatically renewed.”
Additionally, the FTC seeks to require companies offering customers online subscription sign-up options to also explicitly offer online cancellation, as opposed to only doing so through email forms, phone calls, or in-person meetings.
[Related: Why the new FTC chair is causing such a stir.]
As helpful as these changes will be for consumers, unfortunately, there is no current estimated timeline on when the reforms could go into effect. Multiple additional steps are needed, including a public comment period, before the FTC begins writing a final rule proposal. In the meantime, now is as good a time as ever to start reviewing what subscriptions—such as streaming services—are still charging to your bank accounts.
