The Federal Trade Commission (FTC) on Wednesday announced the finalization of a new rule aimed at protecting consumers from frustrating and complex subscription cancellation processes. The regulation, known as “click to cancel,” mandates that companies must make it as easy for customers to cancel a subscription or service as it is to sign up for it.
According to the FTC, the agency receives an estimated 70 complaints daily from consumers who struggle to cancel subscriptions or are charged for services they didn’t realize they had signed up for. “Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC Chair Lina Khan in a statement. “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 rule was approved by a 3-2 vote among FTC commissioners and is part of a broader federal initiative to address common consumer grievances, including the notoriously difficult process of canceling services such as cable subscriptions and gym memberships. The White House had previously expressed its intention to tackle these issues, with National Economic Adviser Lael Brainard calling the rule a key measure in the Biden-Harris administration’s efforts to lower costs for American consumers.
Key Provisions of the “Click to Cancel” Rule
The finalized rule includes several important provisions that aim to prevent companies from exploiting customers through confusing cancellation processes. It prohibits businesses from:
Misrepresenting any material facts during the marketing of products or services that include a negative option feature.
Failing to clearly disclose the essential terms before obtaining a consumer’s billing information for subscriptions or similar services.
Charging consumers without obtaining their explicit, informed consent for the subscription.
Providing a complex or burdensome mechanism for canceling the service and stopping charges.
Implementation Timeline
The majority of the new rule’s provisions will come into effect 180 days after its publication in the Federal Register, giving businesses time to adapt their systems to comply.
Opposition and Concerns
While the “click to cancel” rule has garnered support from consumer advocacy groups, the U.S. Chamber of Commerce has voiced its opposition, accusing the FTC of “micromanaging business decisions.” The business lobbying group contends that the rule will likely drive up costs for consumers, although the FTC argues that the benefits of greater consumer control will outweigh any potential drawbacks.
The White House reaffirmed its endorsement of the regulation, emphasizing that it forms part of a larger effort to simplify consumer interactions and protect against deceptive business practices.
As companies prepare for the rule’s rollout, consumers can anticipate a more straightforward path to managing their subscriptions in the coming months.
Credit: CBS News
