FTC Wants to Help Consumers ‘Click to Cancel’ Subscriptions

The Federal Trade Commission is recommending an easier way for consumers to cancel subscriptions.

The FTC proposed a new “click to cancel” provision Thursday (March 23) that would require businesses to make canceling memberships as easy as signing up for them, thus tackling a common source of frustration among consumers.

“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 proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”

The agency’s proposal is part of a broader campaign by the federal government of late to crack down on unwanted fees, including those involved in subscription services.

Earlier this year, the Consumer Financial Protection Bureau (CFPB) issued a warning to companies that use “negative option” subscription services, which are those that renew automatically unless the consumer cancels, or that begin with a lower fee and then automatically shift to a higher price.

“Consumers shouldn’t have to jump through hoops to cancel subscriptions they don’t want, and they shouldn’t have to worry about a trial marketing offer turning into an unwanted monthly charge,” CFPB Director Rohit Chopra said.

The click to cancel rule is one of several the FTC is suggesting in terms of subscriptions and recurring payments, arguing these changes would protect consumers from “seemingly never-ending struggles to cancel unwanted subscription payment plans for everything from cosmetics to newspapers to gym memberships,” according to the release.

Among the changes the FTC is recommending is a simpler cancellation method. For example, if a consumer can sign up online, they should be able to cancel their membership on the same website with the same number of steps, the release stated.

In addition, the proposed rule would let companies pitch additional offers or modifications when a customer tries to cancel. However, the rule would also require sellers to first ask customers if they want to hear these offers, according to the release.

“In other words, a seller must take ‘no’ for an answer and upon hearing ‘no’ must immediately implement the cancellation process,” the FTC said in the release.

As PYMNTS has written, the headaches consumers face when trying to cancel subscriptions are a common source of frustration. One survey of subscription holders showed that 34% said it was difficult to cancel or turn off automatic payments, as reported in the “Subscription Commerce Tracker®,” a PYMNTS and Vindicia collaboration.