Streamlined Regulation Mandating Simplified Cancellation of Unwanted Automatic Renewals
Rewritten Article:
In a breakthrough move, the Federal Trade Commission (FTC) has proposed a new rule to curb predatory business practices, making it as simple to cancel a subscription as it was to sign up for one. This rule is intended to put an end to deceptive tactics that force consumers to continue paying for services they no longer desire.
When you subscribe online, businesses will now need to offer a clear, online method for canceling the subscription. If you sign up in person, you'll have the option to cancel in person or over the phone. The rule also requires companies to provide transparent information about what you're signing up for and obtain your consent before enrolling you in a negative option feature – a subscription model where you're automatically signed up and billed unless you take specific steps to cancel.
FTC Chair Lina Khan stated, "Far too often, businesses make consumers jump through endless hoops to cancel a subscription. This FTC rule will do away with these underhanded tactics, saving Americans both time and money."
The FTC approved the rule by a vote of 3-2. Certain provisions initially planned for the rule were removed, such as an annual opt-out reminder for customers and a consent requirement for additional deals to keep customers subscribed. The majority of the rule's provisions will take effect 180 days after it is published in the Federal Register.
Business groups attempting to scuttle the rule argued that they receive few complaints from customers who struggle to cancel their subscriptions and that adding a simple cancel button to websites might lead to accidental cancellations. However, in announcing the new rule, the FTC reported that complaints about hard-to-cancel subscriptions have been on the rise, increasing from an average of 42 per day in 2021 to 70 per day in 2024.
Over the past few years, the FTC has filed lawsuits against several notable tech companies for running predatory subscription services. The FTC claims that Amazon "deceived" millions of people into subscribing to Amazon Prime and then made cancellation difficult. The agency charges Adobe with making cancellation difficult and with concealing early termination fees from customers when they canceled services.
- The FTC's new rule will require tech companies to make canceling subscriptions as easy as registering, eliminating deceptive practices that force consumers to continue paying for services they no longer desire.
- In the future, businesses will be obligated to offer a clear, online method for canceling subscriptions, addressing the concern of consumers who have struggled to end subscriptions in the past.
- Avenues for canceling subscriptions in person or over the phone will also be provided, ensuring consumers have choices when terminating their services.
- As part of the new rule, tech companies must provide transparent information about services and obtain consent before enrolling consumers in negative option features, helping consumers make informed decisions about their future subscriptions.