(The Center Square) – A new rule from the Federal Trade Commissions aims to make it easier for consumers to cancel subscriptions.
The Federal Trade Commission announced Wednesday a final “click-to-cancel” rule that will require sellers to make it as easy for consumers to cancel their enrollment as it was to sign up.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Commission Chair Lina Khan said. “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.”
The FTC’s updated rule will apply to almost all negative option programs in any media. Negative option marketing is a business practice where a customer is automatically charged for a product or service unless they take action to cancel or reject the offer.
The rule also will prohibit sellers from misrepresenting any material facts while using negative option marketing; require sellers to provide important information before obtaining consumers’ billing information and charging them; and require sellers to get consumers’ informed consent to the negative option features before charging them.
Most of the final rule’s provisions will become effective 180 days after they are published in the Federal Register.
The FTC’s announcement Wednesday was part of the agency’s ongoing review of its 1973 Negative Option Rule, which the agency is modernizing to address unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs in an increasingly digital economy where it’s easier than ever for businesses to sign up consumers for their products and services.
The commission vote approving publication of the final rule was 3-2, with Commissioners Melissa Holyoak and Andrew Ferguson voting no.
The commission adopted the final rule with changes, most notably dropping a requirement that sellers provide annual reminders to consumers of the negative option feature of their subscription and dropping a prohibition on sellers telling consumers seeking to cancel their subscription about plan modifications or reasons to keep to their existing agreement without first asking if they want to hear about them.
Commissioner Rebecca Kelly Slaughter said that was due to FTC rules.
“Americans understand the importance and value of such a requirement; many have discovered that they or their parents had been paying for years or even decades for a service wholly unused, such as a dial-up internet service from the 1990s,” she wrote. “The reason that the Commission declines to finalize this proposal is not that it lacks policy merit but that the record in total does not support its inclusion in the Final Rule as proposed.”
Slaughter urged lawmakers at both the state and federal level to address the issue.
“Congress and state legislatures, by contrast, have plenary authority to require such a reminder,” she wrote.
By Brett Rowland | The Center Square
