FTC Is Trying to Make It Easier to Cancel Recurring Subscriptions

  • The FTC is proposing a new policy that makes it easier for consumers to cancel subscriptions. 
  • The “Click to Cancel” rule would make it harder for businesses to trick consumers into renewing subscriptions.
  • The proposal comes as the FTC continues to review its 1973 Negative Option Rule.

If you’ve ever gotten charged for a subscription after forgetting to cancel it, a new rule might be coming from the Federal Trade Commission to help you out.

The FTC proposed a “click to cancel” provision on Thursday, a regulation it said is intended “to make it as easy for consumers to cancel their enrollment as it was to sign up.” The policy would cover both digital and physical subscriptions including, but not limited to, digital streaming, gym memberships, phone companies, and cable TV services.

“The idea here is pretty simple,” FTC Chair Lina Khan said on a Wednesday call, per a CNN report. “Companies should not be able to manipulate consumers into paying for subscriptions that they don’t want.”

The new rule would require companies to offer a simple cancellation mechanism that will allow users to cancel subscriptions using the same method they used to sign up. For example, you wouldn’t have to cancel a subscription in-person or over the phone if you signed up for it online.

Other changes proposed by the FTC include the ability for customers to decide whether or not sellers can pitch additional offers as they’re trying to cancel a subscription, allowing users to prevent being bombarded with modifications or other subscriptions in the process. 

The proposal comes as the FTC continues to review its 1973 Negative Option Rule, a policy used to combat harmful or unfair subscription services. The FTC defines negative option as “a term or condition under which the seller may interpret a consumer’s silence or failure to take affirmative action to reject a good or service or to cancel the agreement as acceptance or continuing acceptance of the offer.” 

Updates to the rule would also require sellers to annually remind subscribers enrolled in negative option plans that don’t involve physical items before their subscription is automatically renewed.

In its announcement, the agency said it receives thousands of complaints about difficulty canceling subscriptions each year.

“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” Khan said in a statement. “The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”

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