STATEMENT: Canceling subscriptions, memberships to be easier under new FTC rules

WASHINGTON – Consumers should encounter fewer headaches under new rules the Federal Trade Commission (FTC) announced Wednesday that will require companies to make subscriptions and memberships easier to cancel.

The new “click-to-cancel” rules tackle what’s known as “negative option” marketing, where companies are allowed to interpret the lack of a response from a customer as “yes.” Going forward, companies that offer subscriptions such as streaming services, gym memberships, newspapers and beauty products will have to allow consumers to cancel a subscription just as easily as they signed up. For example, if customers enrolled online in two steps, they must be able to cancel online in two steps. If they signed up in person, they must be able to cancel online or by phone.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said Commission Chair Lina Khan. “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 rules also prohibit companies from other actions involving subscriptions:

• Lying about an important fact involving the product or service.
• Failing to “clearly and conspicuously” disclose terms before collecting payment information.
• Failing to get a customer’s “express informed consent” to start the subscription.
• Billing people who didn’t agree to pay.
  

Complaints about subscriptions have soared in recent years; the FTC now receives nearly 70 a day on average, officials said. The FTC notes the problem is so severe that several states this year passed various laws aimed at reigning in abusive subscriptions. These include Tennessee, Virginia, Minnesota and California. 

In response, Teresa Murray, Consumer Watchdog Director at Public Interest Research Group, said:

“For years, too many companies have used questionable tactics to trap customers in recurring payments even if they no longer want or need their services. Subscriptions and memberships have often been like a visit to the Hotel California: ‘You can check out any time you like, but you can never leave.’ Now, you’ll be able to leave.

“The FTC for decades has fielded thousands of complaints every year about subscriptions renewed without consent. Also, many consumers complained about cases where they tried to cancel, but encountered a never-ending phone tree or online maze that required click after click after click, only to find themselves back at the beginning. The new rules give consumers more freedom to switch providers, read a different news service, buy a different pet food or none at all.

“These rules come after the FTC sued two huge companies, Amazon and Adobe, over allegations they used ‘dark patterns’ to rope customers into expensive recurring subscriptions and make it extremely difficult to cancel. Those lawsuits are not yet resolved, but it’s clearly time to turn the page on unwanted subscriptions.”

See our consumer guide:
Canceling subscriptions and memberships: How to do it properly