The FTC adopted a ‘click to cancel' rule last week, which requires businesses to make it just as easy to cancel a subscription as it was to sign up for it, along with other subscription-related consumer protections.
Here are the new rules:
- The cancellation process must be as simple as the sign-up process, and companies are prohibited from using deceptive tactics or difficult processes to retain customers.
- Businesses will have to get consent from customers before renewing subscriptions or converting free trials into paid memberships.
- Businesses will be banned from forcing customers to go through a chatbot or agent to cancel subscriptions that were originally signed up to using an app or website.
- Memberships signed up to in person must now offer the ability to terminate them by phone or online.
- Consumers have to know exactly what they're agreeing to before signing up, and sellers must be able to demonstrate that if it came down to it.
FTC chair Lina Khan said, “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.”
She added, “The pandemic brought to the surface just how businesses are making people jump through endless hoops,” and noted that requiring in-person cancellations while the businesses themselves were closed “really highlighted the absurdity of these practices.”
FTC commissioners passed the final rule on a 3-2 vote, with the three Democrats voting for it and the two Republicans voting against. Commissioner Melissa Holyoak published her dissent to the new rule in a 13-page document that effectively outlines why she hates consumers and wants to sabotage the FTC's work from the inside.
Well, it actually says that she feels the new rule oversteps the power of the FTC and wouldn't hold up under judicial scrutiny. She also accuses Lina Khan of “electioneering” by “rushing” the rule out right before the election to win her desired candidate political favor.
At one point Holyoak wrote about the timeliness of the rule, “Why the rush? There is a simple explanation. Less than a month from election day, the Chair is hurrying to finish a rule that follows through on a campaign pledge made by the Chair’s favored presidential candidate.”
Why the rush? Difficult-to-cancel subscriptions have been a problem for DECADES! As a consumer, this new rule doesn't feel rushed — it feels 30 years late.
Plus, are things not allowed to happen at the FTC during the October before an election? Everything has to be put on pause as to be fair to both candidates, according to Melissa Holyoak? Sorry if we interrupted your vacation.
In my opinion, this latest action by Khan is aligned with everything else she's done to protect consumers since becoming FTC Chair, regardless of its timing, and doesn't overstep the reach of the FTC, but rather, is exactly what the FTC was designed to do. However that statement is biased, as I'm a Lina Khan fanboy.
The new rules will go into effect in six months. So get ready to start canceling things!