WASHINGTON, D.C. — The Federal Trade Commission (FTC) has proposed a new rule that requires companies to make it as easy for consumers to cancel their subscriptions as it was to sign up. This “click to cancel” provision is one of several proposed updates to the FTC’s rules regarding subscriptions and recurring payments. The proposed changes aim to protect consumers from the struggles of canceling unwanted subscription payment plans for products and services like cosmetics, newspapers, and gym memberships.
The proposed rulemaking is part of the FTC’s ongoing review of its 1973 Negative Option Rule. Negative-option programs, such as subscriptions and memberships, can be beneficial to both consumers and businesses. However, they can also become problematic when marketers fail to make adequate disclosures, bill consumers without their consent, or make cancellation difficult or impossible.
The proposed rule would make several specific changes, including implementing a simple cancellation mechanism that requires businesses to make it as easy to cancel a subscription as it was to start it. Additionally, before making additional offers, sellers must first ask consumers whether they want to hear them and provide an annual reminder to consumers enrolled in negative option programs before they are automatically renewed.
FTC Chair Lina M. Khan stated that some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place. The proposed rule would save consumers time and money, and businesses that continue to use subscription tricks and traps would be subject to stiff penalties.
The notice of proposed rulemaking was approved by a 3-1 vote, with Commissioner Christine S. Wilson dissenting. Once published in the Federal Register, consumers can submit comments electronically, and the public may submit comments in writing.