This Wednesday, the Federal Trade Commission (FTC) announced the implementation of a new rule, known as “click to cancel”whose main objective is to make it easier for consumers to cancel their memberships and subscriptions in an easy, simple and simple way, just as happens when they subscribe.
Through a statement, the FTC explained that the measure arose after they received around 70 complaints a day about subscription charges that are too difficult to cancel or that people didn’t realize they had signed up in the first place.
It is well known that many of the companies that manage a membership or subscription strategy, such as streaming platforms such as Netflix or Amazon Prime, They usually have a cumbersome cancellation process. There are even services that delay the end of the contract or try to convince the client not to do so, making it more difficult to delete the account that is no longer wanted.
“Too often, companies force people to go through endless procedures to cancel a subscription,” said Lina M. Khan, president of the Commission. “The FTC rule will put an end to these tricks and traps, saving Americans time and money. No one should have to pay for a service they no longer want.“.
The FTC clarified that the measure will be implemented 180 days after being published in the Federal Register. This rule will apply to all services that manage a membership or subscription, such as technology accounts, department stores, gyms, among others.
Companies will be obliged to simplify the cancellation process, in such a way that It’s as simple as signing up. Additionally, the rule prohibits sellers from misrepresenting material information while using negative option marketing.
The rule also requires companies to provide key information before requesting billing data and requires informed consumer consent before making charges. This is because there is many consumers who are not aware that they were subscribed to some service they don’t even use.
This update is part of the FTC’s ongoing review of the 1973 negative option rule. The agency is modernizing this rule to combat unfair or deceptive practices related to subscriptions and recurring payment programs. This is especially relevant in a digital economy, where Signing up for services is getting easier, but canceling can be a challenge.
Since 2021, the number of complaints about underwriting practices has been increasing. In 2024, the FTC received an average of nearly 70 complaints daily, a significant increase from 42 in 2021. The new rule seeks to address this growing concern by providing a clear legal framework that prohibits sellers from not only falsifying information, but also hiding important terms.
Among the most relevant changes to the rule is the elimination of the requirement for annual reminders about the characteristics of the negative option. The prohibition on informing consumers who wish to cancel about changes to their plans or reasons for maintaining their subscription has also been dropped. These modifications were adopted after evaluating more than 16,000 comments from consumers and government agencies.
The vote to approve this rule was 3 to 2. Commissioner Rebecca Kelly Slaughter issued a separate statement, and Commissioners Melissa Holyoak and Andrew N. Ferguson voted against it. These dissents reflect the diversity of opinions on how to regulate underwriting practices.
This new rule is an important step for ensure that consumers are not exploited by deceptive practices when canceling subscriptions.
The U.S. Chamber of Commerce opposes the government initiative, including the FTC’s new underwriting rule, and accused the agency Wednesday of trying to “micromanage business decisions.” The group argues that the latest measure would increase costs for consumers.
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