The FTC’s New “Click to Cancel” Rule Will Make Terminating Subscriptions Easier: NPR

Appearing at the confirmation hearing in April 2021, FTC Chair Lina Khan spoke morning edition on Thursday about their new “Click to Cancel” show.

Graeme Jennings / AP

Hide caption

Switch caption

Graeme Jennings / AP

Appearing at the confirmation hearing in April 2021, FTC Chair Lina Khan spoke morning edition on Thursday about their new “Click to Cancel” show.

Graeme Jennings / AP

For many, canceling a subscription or membership – even if it was obtained online – has become synonymous with endless pending music and constant sales promotions.

The Federal Trade Commission says it receives thousands of complaints each year from consumers who struggle with recurring charges that they either couldn’t cancel or didn’t know they were signing up in the first place.

Now it is taking new steps to try to change that. On Thursday, the Federal Trade Commission Suggest a new rule It would make it easier for people to cancel those pesky fees — and get their money back.

“This would really say that companies are unable to manipulate consumers into paying for subscriptions they don’t want,” said Lina Khan, chair of the Federal Trade Commission. morning editionLaila Fadel Al-Khamis.

Among other changes, the “click to cancel” provision would require sellers to make it as easy for customers to leave subscriptions — for everything from cosmetics to gym memberships to newspapers — as it is to sign up.

It also aims to give consumers a clearer idea of ​​what they’re signing up for in advance, so they don’t feel “cheated or trapped in subscriptions,” Khan says.

She adds, “The Federal Trade Commission has been filing lawsuits against these practices for years, but unfortunately this practice has continued and this is what leads us now to move forward with this rule.”

The committee just completed the first step of the process, when it voted 3-1 to publish a notice of placing the proposed rules in the Federal Register.

Now members of the public can think the motion through Submit comments electronically. The FTC says it will take these comments into account before finalizing any rule.

It will make it easy to get rid of unwanted recurring charges…

Khan says the idea behind the new rule is simple: For any product or service, canceling should be as easy as registering.

“If you’re able to opt-in online, you should be able to cancel online using the same number of steps,” she explains. “If you open an account over the phone, you need to be able to close it over the phone without suffering from hanging music or endless sales offers.”

This is not always the case now. Many gyms require members to cancel in person or via certified or certified mail. Cell phone or cable providers may allow you to sign up online, but they only allow you to cancel by speaking to a customer service representative who will try to convince you otherwise.

“These companies are betting that customers will be impatient, busy, or overwhelmed to jump every loop,” The three Federal Trade Commission commissioners wrote In favor of changing the rule (Commissioner Kristen Wilson splitdescribing it as very broad).

The new rule would also help the FTC recover money from consumers who have been harmed by these tactics in the past, and strengthen enforcement by imposing civil penalties on companies that violate the rule.

They will face a fine of $50,000 per violation per day.

“When you’re talking about companies that have hundreds or thousands of millions of consumers, that can add up very quickly,” Khan says.

…and helping consumers avoid potential traps in the first place

Khan says it’s not just that consumers are stuck with certain subscriptions. Sometimes, she says, they are “tricked” into signing up with them at first.

That’s why the new rule requires companies to clearly disclose key terms — such as when a trial ends, cancellation deadline, frequency of charges and history of payments — before collecting billing information from a customer.

It would prevent companies from engaging in what the FTC calls “dark patterns,” or manipulative design techniques, that make it difficult for customers to effectively make the decision they want on a company’s website or app.

“Some consumers have reported successfully canceling, only to find out later that they didn’t notice an almost invisible button they needed to click in order to finalize their decision,” the three commissioners said. in their statement.

The rule would also require sellers to provide consumers with an annual reminder before their subscriptions automatically renew.

Companies can still offer customers perks or discounts to persuade them to stay. But they will need the express permission of the client before making the offer.

So if a customer service representative says, ‘I understand you’re looking to cancel, would you like a chance at getting a better deal?'” the consumer will sayAnd “Yes actually, I’d like to see that,” says Khan, or “No, I just want to cancel.”

Ali Schweitzer edited the audio version of this story and Majd Al-Wahidi edited the digital versions.