FTC Moves to Stop Subscription Services From Deceptive Practices

The Federal Trade Commission handed down a new policy statement that aims to increase enforcement against subscription services that use nefarious tactics to get customers to commit to ongoing charges.

“Today’s enforcement policy statement makes clear that tricking consumers into signing up for subscription programs or trapping them when they try to cancel is against the law,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a press release. “Firms that deploy dark patterns and other dirty tricks should take notice.”

See also: Subscriptions Offer Recurring Consumer Touchpoint

The agency’s goal is to reduce the financial harms people endure due to deceptive sign-up practices, which run the gamut of unauthorized charges, ongoing bills, and difficulty in canceling.

This new policy lets companies know that legal action is in the wings if their sign-up practices don’t “provide clear, up-front information, obtain consumers’ informed consent, and make cancellation easy.”

The FTC and other law enforcement agencies have moved to stop “illegal subscription tricks and traps” that are sometimes employed by “unscrupulous sellers” by way of “renewal subscriptions, continuity plans, free-to-pay or free-to-play conversions, and pre-notification plans.”

Read more: 80% of US Consumers Have Subscriptions

Many cases have been brought by the FTC regarding illegal subscription practices, and numerous companies have been sued by the agency for hiding payment information. The FTC has also sued companies that gave customers no choice but to wait endlessly on hold or listen to advertisements before they could cancel.

Under the enforcement policy statement, businesses must disclose all details of a purchase and subscription, including costs and deadlines to prevent further charges. How to cancel must also be obvious to consumers.

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Another tenement of the enforcement is to make cancellation methods “as easy to use as the method the consumer used to buy the product or service in the first place.”