Do you have more trouble leaving a subscription than joining one? Well, the Federal Trade Commission is trying to make that easier for consumers.
The FTC on Thursday proposed a “click to cancel” provision that would make it easier for people to end their enrollments in a variety of memberships, like gyms and newspapers.
The goal is to make leaving a subscription just as easy as signing up for one, the FTC says.
“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” FTC Chair Lina M. Khan said in a news 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 FTC added that while recurring-payment programs can be beneficial for consumers, they can also be problematic. Many businesses require people to cancel in person or over the phone, meaning they’re forced to wait to speak with someone in customer service.
The FTC said they receive thousands of complaints a year about these types of practices.
The “click to cancel” proposal is part of the “much-needed update” to the 1973 Negative Option Rule that controls practices related to subscriptions and memberships, Khan said.
The proposal calls for businesses to:
- Provide cancellation links on their websites so subscribers can easily leave memberships.
- Offer modifications to subscriptions, but businesses must first ask the consumer if they want to hear about the modifications.
- Send members annual reminders about their subscriptions before they are automatically renewed.
The FTC approved the proposal 3-1, but the rule has not yet been implemented. In a statement, Khan said they want to gauge public opinion before moving forward “with the rulemaking process.”
The public will soon be able to submit their comments about it online.
Khan told CBS News that the rule would call for hefty fines for businesses that violate the proposal — $50,000 per complaint — and allow consumers to cash in on the unwanted subscriptions if they had trouble canceling them.
“This proposed rulemaking is part of a broader effort at the Commission to examine how we can deploy our scarce resources to achieve maximum impact,” Khan said in a statement. “Using our rulemaking tools to clarify the law for market participants across the board and activate civil penalties and redress is a key part of this effort.”