Something small: There are many subscription services available today, from streaming sites like Netflix and Disney Plus to non-digital services like gym memberships. Registering online is usually very simple, however canceling is often more complicated, sometimes on purpose. But the FTC is trying to turn things around.
Federal Trade Commission on Thursday Proposal A “click to cancel” requirement that requires companies to make canceling recurring subscriptions as simple as signing up for them.
Many companies turn their cancellation mechanisms into a tedious task that requires many steps. Some even ask customers to call phone numbers, where they are put on hold for so long that they decide it’s not worth it. Others require in-person cancellations that involve representatives trying to convince customers to stay. These deceptive tactics often make people pay for subscriptions even when they stop using the services.
“The proposal will save consumers time and money, and companies that continue to use subscription scams and traps will be subject to severe penalties,” said Lina M. Khan, chair of the Federal Trade Commission.
The proposal is part of the FTC’s ongoing review of the 1973 negative option rule, which the agency uses to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring payment programs. It received 17,427 complaints under this rule last year and 16,020 complaints in 2021.
Anyone who has tried to opt out may be aware of being bombarded with various subscription offers, a temporarily reduced price, and other perks — all trying to get customers to keep signing up. The FTC proposes allowing people to decide whether they want to hear about these deals before sellers offer them, meaning companies must accept “no” to get an answer.
Finally, the FTC also suggests that companies send customers an annual reminder of any automatic subscription renewals for anything other than physical merchandise.
Businesses that violate these rules will face a fine of $50,000 per day. “When you’re talking about companies that have hundreds, thousands or millions of consumers, that can add up very quickly,” Khan says.
The FTC voted 3-1 to post a notice to place the proposed rules in the Federal Register, the first step in the process. Members of the public can now provide comments on the proposal.
according to reconnaissance Commissioned by market research firm C+R Research, consumers reduce how much they spend on all subscription services by an average of $133 per month.
Masthead: Elisa Ventur; center: New America