The FTC proposes a formal “click to cancel” provision for subscriptions
The U.S. Federal Trade Commission has sought to end “click to subscribe, call to cancel” subscription policies for years, labeling the practice — common in the news industry — “dark” and “deceptive” and vowing to ramp up enforcement.
But the federal organization admitted this week that its current enforcement and rules “have only gotten part way” to fixing the problem. On Thursday, the FTC announced a formal “click to cancel” provision it says will bring the rules the rest of the way. The commission voted 3-1 to bring this proposal to the public and the next step is allowing consumers to submit comments on the proposed rule electronically.
In case you haven’t had the pleasure of encountering this particular retention tactic in the wild, the rule change would formally ban companies from offering a free or reduced trial without making it clear that customers will be automatically be billed for the full price soon after. It would also ban companies from making it much, much harder to cancel a payment than to sign up for one.
Specifically, “if you can sign up online, you must be able to cancel on the same website, in the same number of steps,” according to the FTC. Sellers must also “take ‘no’ for an answer” instead of continuing to pitch new offers when customers call to cancel a subscription.
“These companies are betting that customers will be too impatient, busy, or confused to jump through every hoop,” FTC chair Lina Khan wrote about the proposed rule.
The new rule would help the FTC with enforcement. Companies could face a fine of $50,000 per violation per day.
“When you’re talking about companies that have hundreds or thousands or millions of consumers,” Khan said, “that could add up quite quickly.”
The FTC said the click to cancel rule is just one of “several significant updates” it is proposing to its rules regarding subscriptions and recurring payments.
“The new click to cancel provision, along with other proposals, would go a long way to rescuing consumers from seemingly never-ending struggles to cancel unwanted subscription payment plans for everything from cosmetics to newspapers to gym memberships,” according to a news release.
You can read more here.