After an inundation of more than 16,000 public complaints, the Federal Trade Commission (FTC) is laying down a “click-to-cancel” rule. This regulation will mandate sellers to streamline the process of cancelling a subscription, making it as straightforward as the sign-up process was.
The FTC made the 3-2 decision following claims of a rising number of complaints about the practices of subscription services over the past five years. The agency reveals that it recorded an average of nearly 70 complaints related to this matter each day in 2024.
FTC Chair, Lina Khan, expressed her concerns on Wednesday stating, “Businesses too often expect people to navigate through a labyrinth just to cancel a subscription.” She went on to explain that the new FTC rule aims to put an end to such inconvenient practices, hence saving Americans both time and money.
This latest rule implemented by the regulatory body encompasses almost all negative option marketing. The FTC defines this marketing method as any action by a firm that interprets a client's inaction as consent to be billed for products and services. For instance, subscription services will persistently bill consumers a monthly fee until they opt to cancel the service.
This new regulation is consequent to the FTC’s ongoing revamp and modernization of its 1973 Negative Option Rule. The rule, encompassing pre-notification and continuity plans, extends to situations offering additional products or services to customers, billing them unless they expressly decline the offer. This rule also pertains to free trials, which autonomously bill the consumer at the trial's conclusion unless action is taken, as well as automatic renewal policies.
Most provisions of the final rule will take effect 180 days following its publication in the Federal Register. After this rule comes into force, sellers will face a prohibition from: