The Federal Trade Commission on Wednesday said it would take on difficulty to cancel subscriptions with its “click-to-cancel” rule.
And, most importantly, the rule will require businesses make it “at least as easy” to cancel a subscription as it was to sign up. That means if a consumer signs up for a subscription to a streaming service online, they must also be allowed to cancel that plan on that same website.
Many businesses make sign-ups easy but require a series of steps to cancel that same plan, which can range from repeated prompts to clarify the decision or a discussion with a customer service worker. Sellers can still pitch additional offers or modifications to an existing subscription before cancellation, but consumers can reject all offers with a single click under the proposed rule.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Chair Lina Khan said in a statement. “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.”
The FTC said it receives thousands of complaints about recurring billing and negative option subscription practices each year. It’s received an average of almost 70 consumer complaints per day in 2024 — that’s as many as 20,300 complaints in total — compared to 42 per day in 2021, or 15,330 overall.
When the FTC first proposed the rule in March 2023, it gathered more than 16,000 public comments from consumers, advocates, and others. Commenters criticized practices at several companies, ranging from HelloFresh and Planet Fitness (PLNT-1.88%) to BJ’s Wholesale (BJ-0.92%) and Symantec. Trade groups largely criticized the rule, arguing that parts of it were unnecessary.
The rule comes as part of the Biden administration’s war on junk fees and its “Time is Money” initiative, which aims to do away with the complicated steps companies make customers go through to receive refunds or return items. Past efforts have cracked down on credit card late fees, family seating fees, bank overdraft fees, and airline refunds.
The FTC has proposed rules that would ban companies from charging junk fees and ban auto dealers from using “bait-and-switch tactics to deceive consumers.” The U.S. Department of Labor and the U.S. Federal Communications Commission have also proposed anti-junk fee rules against hidden charges in retirement products and cable and satellite services, respectively.
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