FTC’s Click to Cancel Rule Takes on Tough to Cancel Subscriptions

WASHINGTON, DC - A new rule finalized today by the Federal Trade Commission (FTC) addresses the growing trend of companies trapping consumers in subscriptions with complicated cancellation terms by forcing companies to provide the same method to cancel a subscription as it provided to sign up.

"At its core, the Click to Cancel rule ensures that consumers have control over their subscriptions rather than being manipulated and tricked into paying for something they no longer want," saidErin Witte, Director of Consumer Protection for the Consumer Federation of America. "No subscription business model should be structured to profit from a gauntlet-style cancellation process."

The new rule also prohibits companies from lying about or misrepresenting the terms of subscriptions that can leave consumers stuck with recurring payments for products and services they didn't want to keep getting. Companies must provide clear subscription information and make sure customers know what they are agreeing to.

"Companies make it easy for consumers to click to sign up and easy for the companies to automatically withdraw funds from consumers' accounts," saidShennan Kavanagh, Director of Litigation at the National Consumer Law Center (NCLC). "People should be able to click to unsubscribe just as easily - not spend months trying to cancel unwanted subscriptions."

A proposed requirement that companies remind consumers before a negative option plan ends, including free trials and other special introductory offers that automatically renew unless the customer cancels, was dropped from the final rule, which passed by a 3-2 margin. The rule also does not prevent companies from continuing to entice subscribers to not cancel.

"The FTC's new rule is an important recognition of the struggles consumers have been facing to free themselves from hidden contract language and misleading practices," Kavanagh added. "We hope the FTC does not close the door to future rulemaking and that Congress and the states will go further to provide consumers even more transparency and control over how negative option plans impact their monthly budgets."