Have you ever struggled to cancel a service you don’t use? That’s hopefully going to be a thing of the past.
The FTC’s final ‘click-to-cancel’ ruling went into effect this week, on January 15. This means businesses — including streaming services, cable TV, home shopping platforms, and gyms — must make canceling a subscription as easy as signing up. However, businesses have until May 15, 2025, to comply with the ruling, so it may take some time for customers to see the new methods.
On October 16, the US Federal Trade Commission adopted the final “click-to-cancel” rule requiring businesses to make canceling a subscription simple. Whether it’s a magazine subscription, gym membership, or monthly payment for a streaming service, stopping an unwanted recurring subscription will become easier for consumers.
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“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC chair Lina Khan. “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.”
In 2024, the FTC received 70 consumer complaints per day about unfair subscription practices.
The rule isn’t in the clear, though. In response to the ruling, several industry groups have sued the FTC in the Fifth Circuit Court of Appeals arguing that “the FTC acted beyond its statutory authority, in violation of the US Constitution.” These groups include the Internet & Television Association, the Electronic Security Association, and numerous cable, home security, and online advertising companies.
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The FTC proposed the click-to-cancel provision after finding that many companies were engaging in “unfair” and “deceptive” subscription practices. Specifically, the FTC sued Adobe for harming consumers by enrolling them in its default subscription plan without properly disclosing the plans’ terms. The commission also sued Amazon for signing people up for Prime “without their consent” and “sabotaging” consumers’ attempts to cancel, and it criticized Microsoft for “product degradation” related to Xbox Game Pass price increases.
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Under the FTC’s Click-to-Cancel policy, businesses are required to provide clear language on auto-renew and accessible online cancellation process and to avoid tactics that create unnecessary problems, like requiring phone calls or additional steps that were not part of the sign-up process.
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According to the ruling, “negative-option programs all share a central feature: each contains a term or condition that allows a seller to interpret a customer’s silence, or failure to take affirmative action, as acceptance of an offer. Negative-option programs generally fall into four categories: prenotification plans, continuity plans, automatic renewals, and free trial (i.e., free-to-pay or nominal-fee-to-pay) conversion offers.”
Recently, the Consumer Financial Protection Bureau (CFPB) announced in a blog post that it “can enforce the new click-to-cancel rule, which will further enable the CFPB to protect consumers from being tricked into paying for products or services they do not want or need.”
According to the CFPB – a government agency charged with protecting consumers from unfair treatment by financial institutions – subscription and membership revenue models “create incentives for firms to make it difficult to cancel recurring payments and charges.” When consumers struggle to cancel services, the agency noted, they often file disputes with banks to counteract these recurring charges, with more consumer complaints going to the CFPB.
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Source: Robotics - zdnet.com
