The FTC Is Making It Easier to Get out of Online Subscriptions
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The US Federal Trade Commission (FTC) has ratified a new “Click-to-Cancel” rule that should make cancelling any online subscription as easy as it is on the App Store.
As the FTC announced today, the final “click-to-cancel” rule will require any company selling a recurring subscription online to make it as easy to cancel as it was to sign up in the first place. The rule will go into effect about six months from now.
This will eliminate the hoops many companies make subscribers jump through to get out of their subscriptions — a process engineered to make it so hard to cancel that customers find it easier to keep paying.
It’s not just scammers and smaller fly-by-night outfits that do this. For instance, the New York Times once infamously required online subscribers to call a telephone number and wait on hold to speak to a customer service rep to cancel a subscription that only took seconds to sign up for. That later expanded to let you chat with a “care advocate” online, but it’s only in the past year or so that a simple cancel button has appeared. Other news publications like Bloomberg and the Wall Street Journal have gone down similar roads.
Too often, businesses make people jump through endless hoops just to cancel a subscription. 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.FTC Chair Lina M. Khan
However, perhaps one of the most egregious violators is Adobe. It’s currently the target of an FTC action for “deceiving consumers by hiding the early termination fee” for its plans, “trapp[ing] customers into year-long subscriptions” through those and “numerous cancellation hurdles.”
The FTC also launched a lawsuit against Amazon last year, claiming it “knowingly duped millions of consumers into unknowingly enrolling in its Amazon Prime service” by “using manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’” and then “knowingly complicated the cancellation process for Prime subscribers who sought to end their membership.”
As a result, the FTC’s new rules also prohibit sellers from “misrepresenting any material facts” such as hidden fees or early cancellation penalties, requiring that they provide all the necessary information to consumers before they even ask for a customer’s billing information, much less bill them a subscription fee. Customers must be clearly informed that the subscription will continue until cancelled and provide “express informed consent” to automatic renewal.
Sadly, it’s not all sunshine and rainbows. As Engadget notes in its report on the new rule, the FTC has removed two parts of the original proposal. The first was a proposed requirement that companies provide annual reminders for subscription renewals. Commissioner Rebecca Kelly Slaughter wrote in a separate statement that the FTC was concerned it didn’t have sufficient authority to mandate renewal notices. However, she made it clear Congress and state legislatures do, and the FTC’s decision to omit this part was a matter of taking “a cautious approach to the [FTC’s] jurisdictional limits” and not a judgment call on the merits of annual reminders.
The other proposal that didn’t make it into the final rule would have required companies to get consent from a cancelling customer before offering discounts or perks to encourage them to keep their subscription. It’s unclear how this will impact the “one-click” rule in practical terms. This could still mean customers must wade through extra information before the final cancel button. Still, the rule may supersede that, mandating that the cancellation process remain as straightforward as possible while allowing businesses to communicate offers to customers in other ways.
