The United State government’s Federal Trade Commission has announced a new plan that, if implemented, could make it easier for people to cancel memberships to gyms, streaming services, and lots more. The provision is called “click to cancel,” and the idea is that it should be as easy to cancel a membership as it is to sign up for one. Right now, that’s definitely not the case, as anyone who has ever tried to cancel a gym or news media subscription surely knows.
“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,” the FTC said in a news release.
FTC chair Lina Khan said, “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”
The FTC said it receives “thousands” of complaints each year about problematic business practices like forcing people to cancel their gym memberships in person or keeping people on hold with customer service for lengthy periods of time.
Here is a rundown of the proposed changes, as written by the FTC.
- A simple cancellation mechanism: If consumers are unable to easily leave any program when they want to, the negative option feature becomes nothing more than a way to continue charging them for products they no longer want. To address this issue, the proposed rule would require businesses to make it at least as easy to cancel a subscription as it was to start it. For example, if you can sign up online, you must be able to cancel on the same website, in the same number of steps.
- New requirements before making additional offers: The proposed rule would allow sellers to pitch additional offers or modifications when a consumer tries to cancel their enrollment. But before making such pitches, sellers must first ask consumers whether they want to hear them. In other words, a seller must take “no” for an answer and upon hearing “no” must immediately implement the cancellation process.
- New requirements regarding reminders and confirmations: The proposed rule would require sellers to provide an annual reminder to consumers enrolled in negative option programs involving anything other than physical goods, before they are automatically renewed.
FTC Commissioner Christine S. Wilson issued a dissenting opinion on the measure.
“I appreciate staff’s steadfast efforts to protect consumers from deceptive negative option practices. I might have supported a tailored rule to address the negative option marketing abuses prevalent in our law enforcement experience that consolidated various legal requirements,” Wilson said. “This proposal instead attempts an end-run around the Supreme Court’s decision in AMG to confer de novo redress and civil penalty authority on the Commission for Section 5 violations unrelated to deceptive or unfair negative option practices. For these reasons, I dissent.”
Wilson is resigning as FTC Commissioner on March 31.
The FTC is also in the midst of a legal dispute with Microsoft over its proposed buyout of Activision Blizzard.
