Companies must make it easier to end subscriptions under FTC’s ‘click to cancel’ rule
The Federal Trade Commission has introduced a new ‘click to cancel’ rule that compels all companies with subscription services to make it as easy for users to cancel their membership as it is to sign up.
The new rules also state that all important information around such services should be truthful, clear and easy to find, and that customers must know what they’re agreeing to before they sign up. Companies must be able to demonstrate that people understood this before subscribing to a service or product.
According to the FTC website, any companies that violate these rules will be “liable for redress and civil penalties.” The new regulation takes effect in the US in 180 days.
The ‘click to cancel’ rule is part of the FTC’s ongoing review of the 1973 Negative Option Rule, which centres around instances where companies continue to charge customers unless the latter specifically takes action to cancel their agreement. An example would be the automatic renewals on subscription services like Xbox Game Pass, PlayStation Plus and Nintendo Switch Online.
The review aims to modernise the Negative Option Rule in order to “combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs in an increasingly digital economy where it’s easier than ever for businesses to sign up consumers for their products and services.”
FTC Chair Lina M. Khan added: “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.”
