Canceling a subscription is about to get a lot easier, thanks to new FTC rule

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Whether it's a magazine subscription, gym membership, or a monthly payment for a streaming service, canceling unwanted recurring subscriptions has just become easier with a new Federal Trade Commission (FTC) ruling. On Wednesday, the US Federal Trade Commission adopted a final "click-to-cancel" rule requiring businesses to make canceling a subscription as easy as signing up for it in the first place.

Last year, the FTC proposed a "click to cancel" provision after finding that many companies were engaging in "unfair" and "deceptive" subscription practices. The FTC sued Adobe for harming consumers by enrolling them in its default subscription plan without properly disclosing the plans' terms. The FTC also sued Amazon for signing people up for Prime "without their consent" and "sabotaging" consumers' attempts to cancel, and it criticized Microsoft for "product degradation" related to Xbox Game Pass price increases.

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Under the newly passed rule, businesses are forbidden from using a cancellation method other than the one used by consumers to sign up. Moreover, the FTC will also require businesses to clearly disclose the terms of their subscriptions and obtain customer consent before charging them.

"Too often, businesses make people jump through endless hoops just to cancel a subscription," FTC chair Lina Khan stated in the press release. "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."

FTC

According to an FTC blog post, the final rule provides a comprehensive legal framework that "protects people from misleading enrollment tactics, billing practices, and cancellation policies and provides businesses with clear rules of the road, all consolidated in one place, to help them build customer trust and avoid enforcement action." 

This includes: 

"Misrepresenting any material fact made while marketing goods or services with a negative option feature;" "Failing to clearly and conspicuously disclose material terms prior to obtaining a consumer's billing information in connection with a negative option feature;" "Failing to obtain a consumer's express informed consent to the negative option feature before charging the consumer; and "Failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges."

Most of the provisions in the "click-to-cancel" ruling go into effect 180 days after it is published in the Federal Register.