Canceling a subscription or membership has become the bane of existence for many consumers. The unending hold music and persistent sales pitches that one has to go through to cancel a subscription has caused frustration and anger for many. The Federal Trade Commission has received thousands of complaints every year from consumers who have been plagued by recurring charges they were not able to cancel or didn’t even know they were signing up for in the first place.
But finally, there is some good news. On Thursday, the FTC proposed a new rule called the “Click to Cancel” provision. It would require sellers to make it just as easy for customers to leave subscriptions — whether it be for cosmetics, gym memberships or news publications — as it is to enroll.
The rule aims to give consumers a clearer idea of what they are signing up for in advance, so they don’t feel “tricked or trapped into subscriptions.”
FTC Chair Lina Khan said the idea behind the new rule is simple: for any product or service, it should be as easy to cancel as it is to sign up. So, for example, if you were able to subscribe online, you should be able to cancel online using the same number of steps. If you open an account over the phone, you should be able to close it over the phone without being subjected to terrible hold music or sales pitches.
“It would really say that companies are not able to manipulate consumers into paying for subscriptions that they don’t want,” Khan told NPR.
The new rule would help the FTC get money back from consumers who have been harmed by these tactics in the past and strengthen enforcement by introducing civil penalties, including $50,000 fines for companies that violate the rule.
“When you’re talking about companies that have hundreds or thousands or millions of consumers, that could add up quite quickly,” Khan said.
The new rule would also require businesses to clearly disclose key terms, like when the trial period ends, the cancellation deadline, the frequency of charges and date of payments, before collecting billing information from the customer. This would prohibit companies from engaging in what the FTC calls “dark patterns,” or manipulative design techniques that make it hard for customers to effectively make the decision they want on a company’s website or app.
“These companies are betting that customers will be too impatient, busy, or confused to jump through every hoop,” wrote the supporters of the rule.
The rule would also require sellers to provide consumers with an annual reminder before their subscriptions are automatically renewed. Businesses can still offer perks or discounts to customers to convince them to stay, but they would need explicit permission from the customer before making the offer.
