The new rule that could make it easier for consumers to cancel subscriptions

Cancelling a subscription can sometimes be more difficult than it needs to be sometimes. To address this, the Federal Trade Commission (FTC) has proposed a new rule that would make cancelling a subscription much easier using a simple “click to cancel” feature. 

Under the new rules, the FTC would require any company selling a subscription to make it as easy to cancel the service as it was to sign up in the first place. 

The agency says that this proposal was triggered by a high number of complaints each year from consumers about their struggles to cancel subscription payments. In some cases, stopping recurring fees for things like gym memberships or streaming services is almost impossible. 

However, the FTC says that if consumers no longer need or want the service, they should be able to stop the payments with ease. 

According to the proposal, the new rule would challenge “ unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs”, as part of the 1973 Negative Option Rule. 

The new rule would require:

• A simple cancellation mechanism so consumers can leave the subscription easily at any point without a “negative option” that charges them for products they don’t want.
• It should be as easy to cancel as it is to subscribe to a service. For example, if a consumer signs up online in 3 steps, the cancellation process should be similar.
• The company should ask sellers if they want to hear additional offers before trying to sell them modifications to their subscription, like a discount.
• Companies should send reminders every year before automatically renewing.

The agency said in a statement: “Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”

However, it is expected that businesses will oppose this rule, as recurring payments from subscriptions increase their profits. When customers subscribe to a service, they are much less likely to cancel, even when the company doesn’t spend any money on marketing.