The FTC's 'Click to Cancel' Rule Takes the Stress Out of Canceling Subscriptions

The Federal Trade Commission's "click to cancel" rule has been finalized. 

As early as the end of the year, you'll notice less pressure to sign up for subscriptions and will be able to cancel your subscription without much hassle. 

The average consumer spends about $91 on subscriptions each month, according to a CNET survey about subscription creep. Stopping an unwanted subscription or membership with one click (and not feeling misled to enroll in the first place) can help you keep more cash in your pocket. 

The "click to cancel" rule will apply to most "negative option" marketing, where a company interprets a customer's failure to explicitly decline or opt out as an agreement to be billed for goods or services. Charging consumers for a recurring membership or subscription without appropriate disclosures -- or without their consent -- can put them at serious financial risk. 

"Too often, businesses make people jump through endless hoops just to cancel a subscription," Commission Chair Lina M. Khan said in Wednesay's announcement. "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 FTC said that the number of complaints from consumers who unknowingly signed up for a service or who can't easily back out has steadily increased over the past five years. That's where the FTC's new provision, promising more business transparency and customer bargaining power, comes into play. 

What the 'click to cancel' rule means for you

Earlier this year, the Biden administration announced a set of proposals that included a rule to "make it as easy to cancel a subscription or service as it was to sign up for one."

With the new rule, sellers must be more transparent and can't misrepresent material or mislead customers when marketing a service. Businesses must conspicuously and clearly disclose terms and get the consumer's informed consent before charging them for a subscription or membership. There must also be a simple mechanism to cancel the negative option feature and immediately halt charges. 

Retailers that violate the rule will penalized with civil penalties and redress, according to the FTC. 

The changes won't happen overnight. The amendments are effective 60 days after the rule is published in the Federal Register, according to an FTC representative. "We do not yet know what date the notice will be published in the Federal Register," the representative said by email. 

Source: FTC Click to Cancel Rule

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