The Federal Trade Commission just announced a new set of rules intended to pull customers out of their frustrating subscription cancellation “doom loops.” The “Click to Cancel” rule not only ensures that customers know what they’re signing up for before paying, but that they have an easy way out if it gets to be too much.
“Too often, businesses make people jump through endless hoops just to cancel a subscription. 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,” commission chair Lina M. Khan wrote in the rule’s announcement.
Khan told NBC that the commission now receives more than 70 complaints per day pertaining to difficult subscription cancellation processes. Part of the body’s “Time is Money” initiative — which also includes cracking down on fake reviews and AI-generated advertising — the new rule seeks to protect consumers against what are known as negative option programs, or marketing tactics that require consumers to input payment information and consent to a subscription before accessing free services or trials.
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Under the new provisions, sellers are prohibited from misrepresenting these negative option features in marketing. They must disclose terms before obtaining a customer’s billing information, get customer consent, and (most relevant to current subscribers) provide simple cancel options that would immediately stop charges.
The FTC is amending an existing subscription and negative option rule, introduced in 1973.
Meanwhile, the U.S. Chamber of Commerce has pushed back against the FTC’s customer-focused rulings, arguing that things like the click to cancel requirement will cost the average American more time and only succeed in “micromanaging” businesses. “Businesses succeed by being responsive to customers and have a far better track record of customer service, streamlined paperwork, and prompt response times than the federal government,” wrote U.S. Chamber of Commerce executive vice president Neil Bradley. “Imposing heavy-handed regulations that micromanage business practices and pricing is the wrong approach, inevitably raising costs for consumers.”
Khan responded to the claims in a comment to NBC, “At the end of the day, if a business is dependent on tricking or trapping people into subscriptions, that’s not a good business model, and that’s not one that we should stand for.”
