Federal regulators have finalized the “click to cancel” rule for memberships and subscriptions.
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Health clubs that demand membership cancellations by certified mail or in person. Cable subscriptions that require lengthy calls to customer service, where representatives aggressively dissuade from cancellation.
Federal regulators say they receive around 70 complaints a day from people about charges for subscriptions that are either arduous to cancel or that people didn’t realize they accepted in the first place.
Now, a new U.S. rule will require retailers, gyms and other businesses to make canceling subscriptions as easy as enrolling in them, and to make the subscription process more transparent.
The Federal Trade Commission on Wednesday released a final rule called “click to cancel,” which says online subscriptions should require the same amount of clicks to end as they do to sign up, and in-person signups should have an option to cancel online or over the phone.
The new rule also directs companies to give people a clearer idea of the exact terms before they sign up, so they don’t feel “tricked or trapped into subscriptions,” as FTC Chair Lina Khan has told NPR.
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“Too often, businesses make people jump through endless hoops just to cancel a subscription,” Khan said in a statement on Wednesday. “Nobody should be stuck paying for a service they no longer want.”
Numerous business groups and the FTC’s Republican commissioners oppose the rule, arguing the agency overstepped its legal authority to pass new burdensome requirements — days before the election. The U.S. Chamber of Commerce on Wednesday said the regulators made a “power grab … to micromanage business decisions.”
The Biden administration has promoted the “click to cancel” initiative as part of its campaign against junk fees . Vice President Kamala Harris has included it in her economic platform as a presidential candidate. The White House praised the finalized rules on Wednesday.
Most of the new requirements will go into effect in about six months. They will also give the FTC more power to help consumers get their money back from violating companies. The final version of the rule did not include a previously proposed requirement for companies to periodically remind people about recurring charges, however.
The FTC previously sued Amazon on a related matter, alleging the company “tricked” people into buying Prime memberships that were purposefully hard to cancel.
