The Federal Trade Commission (FTC) has finalized a new rule to simplify subscription cancellations. Announced Wednesday, the “click to cancel” rule mandates that businesses make it as easy for consumers to cancel a subscription as it was to sign up. Most of the rule’s provisions will take effect in 180 days.
Under the new rule, companies cannot require customers to speak with a live or virtual representative if this step was not part of the original sign-up process. Additionally, businesses cannot charge extra for phone cancellations and must provide options for cancellation based on the initial enrollment method. For example, if a consumer subscribed in person, they may cancel in person but are not required to.
The FTC’s ruling also addresses “negative option programs,” where consumers are automatically charged if they don’t cancel after a trial period. This rule forces companies to disclose terms, including fees and renewal details, before consumers commit. Furthermore, businesses must obtain explicit consent for program enrollment, such as a checkbox.
Non-compliant companies could face civil penalties from the FTC, which may sue for damages to compensate affected consumers. The rule also aligns with similar state regulations, like California’s click-to-cancel law, which takes effect next July. This rule is part of the FTC’s effort to protect consumers from deceptive subscription practices and provide transparency.
Source: FTC