The Federal Trade Commission is looking to do away with hard to cancel subscriptions — aren’t we all? A new proposal from the FTC would require merchants to make it easier for consumers to remove themselves from so-called free trials or recurring subscriptions with an updated policy the commission refers to as “click to cancel.”
The policy proposal was announced this morning by the FTC. The commission explained in a fact sheet that consumers can often enjoy the ease of recurring subscriptions and free trials, but that those perks can become a problem when sellers hide important information, secretly bill you, or make it nearly impossible to opt out or cancel. The key provision in the proposal is to make cancelling a subscription or free trial as easy as it is to start it, requiring businesses to include a “simple cancellation mechanism,” as the FTC referred to it in a press release.
“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” said FTC chair Lina M. Khan in the release. “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 proposal includes two other provisions. The first stipulates that sellers can offer additional products or services when consumers cancel their membership, only after the business has given the consumer the option to agree to hear these additional offers. In other words, businesses should start getting comfortable with rejection. The second provision requires sellers to provide an annual reminder to customers enrolled in a subscription before they are charged. This doesn’t apply to programs involving physical goods.
The FTC says that this new proposal comes as the commission continues to review its Negative Option Rule, which was created to curb unfair or deceptive practices that include recurring charges or subscriptions for things that are hard to cancel. When a consumer doesn’t opt out of something, companies can see that as a green light to keep them enrolled and to keep charging them money.