Consumers who sign up for subscriptions and memberships online have learned that canceling is often a far more complicated process than the sign-up. Digging through a website’s seemingly impossible to find cancellation page, then making sure you read the fine print to figure out exactly how many months you’ll be charged for, is not an uncommon experience. However, now the Federal Trade Commission (FTC) is working to take the hassle and the frustration out of canceling subscriptions and memberships.
On Tuesday, FTC Commissioner Lina Khan announced that a rule ensuring customers don’t have to jump through hoops to cancel subscriptions is being finalized. The rule, called Click to Cancel, states that customers can cancel the same way they signed up and in the same number of steps. Therefore, a one-click sign-up should equal a one-click cancellation. However, it also makes it mandatory for businesses to get customer consent before changing their free trials into paid memberships. No more credit card surprises? That would be a relief.
The rule is part of a series of FTC initiatives called Time Is Money, which aims to protect consumers from time-wasting inconveniences. Khan explained that the number of complaints the FTC gets about the challenges of canceling subscriptions has been growing “dramatically” in recent years. “Over recent years, we’ve seen increasingly that some firms make it extraordinarily easy to sign up but absurdly difficult to cancel,” she said Tuesday. “And Americans end up paying more money and wasting their time. And so that’s what we’re going to put an end to with this rule.”
While the frustrations are well-known and have seemed to worsen in recent years, not everyone agrees that the FTC’s new initiative will be beneficial to the American consumer. In a statement, the U.S. Chamber of Commerce called the new crackdown an effort to “micromanage business practices.” It said the initiative will “cost the American people more time and money.” It said, “Businesses succeed by being responsive to customers and have a far better track record of customer service, streamlined paperwork, and prompt response times than the federal government.”
Still, consumers in the U.S. have been plagued by businesses that almost seem to trick them into paid memberships. Khan said the issue came into clearer view during COVID. “The pandemic brought to the surface just how businesses are making people jump through endless hoops,” Khan said, noting that many required in-person cancellations even as the businesses themselves were closed and that “really highlighted the absurdity of these practices,” she said.
Khan said that when the FTC first proposed the rule, the agency received at least 16,000 complaints from customers who felt deceived by businesses in this way. Planet Fitness was one company whose customers frequently had challenges canceling memberships, as well as HelloFresh and Amazon, which the FTC sued last year.
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” Khan said in a prepared statement. “These manipulative tactics harm consumers and law-abiding businesses alike.” The company denied any wrongdoing.