The Federal Trade Commission recently approved a new rule that will make it easier for consumers to cancel unwanted subscriptions and memberships. This new “click-to-cancel” rule will prevent businesses from deceiving customers about subscriptions and will require their consent before charging for memberships, auto-renewals, and programs connected to free trial offers.
Businesses will also be required to inform customers when free trials or promotional offers will end and allow them to cancel recurring subscriptions as easily as they signed up for them. This rule is set to take effect 180 days after being published in the Federal Register.
FTC Chair Lina Khan stated, “Too often, businesses make people jump through endless hoops just to cancel a subscription. The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
The Biden administration included this proposal as part of its “Time is Money” initiative, aimed at reducing consumer-related hassles. This initiative will introduce new regulations across various industries, from healthcare and fitness memberships to media subscriptions.
However, the U.S. Chamber of Commerce criticized the administration’s approach, expressing concerns that heavy regulations could lead to higher costs for consumers. Vice President Kamala Harris also highlighted the importance of the “click-to-cancel” rule as a policy she would support if elected.
The final rule was passed by FTC commissioners with a 3-2 vote, following the agency’s receipt of over 16,000 comments on the proposal from consumers, advocacy groups, and trade associations. The Biden administration is also focusing on addressing hidden and bogus fees that can obscure the total cost of various services, such as concert tickets, hotel rooms, and utility bills.
Overall, this new rule aims to protect consumers from deceptive practices and ensure that they have the ability to easily cancel unwanted subscriptions and memberships. Stay informed about these developments by signing up for our newsletter to receive the latest news directly to your inbox.
