The Federal Trade Commission (FTC) appears to recognize the difficulty that many Americans encounter when they try to get out of free trials or subscriptions. Hence, the FTC has proposed a new policy that will make it just as easy to cancel as it was to sign up for a subscription.
Once implemented, people can simply "click to cancel" a subscription, removing all the complexities that make it almost impossible to stop the merchants from billing you.
Proposed Rule Aims to Give Consumers a Simpler Option to Cancel Subscription
As reported by Gizmodo, the FTC has detailed the proposed subscription policy in their a press release. FTC pointed out that while consumers can enjoy the free services offered by the merchants after signing up, they could also be concealing important information that the consumers have unknowingly agreed to. The consumers would not know that the merchant is already billing them, or that they would still have to wait for some time before they can cancel the subscription.
Therefore, the commission made easy cancellation as the main provision of the proposed rule. According to the press release, businesses shall provide a "simple cancellation mechanism" to save the consumers' time, money and effort just to cancel their subscription. Per Vox, this new proposal would mean that consumers are no longer compelled to personally drop by the merchant's head office, write a formal letter, or wait for a long period of time to cancel a subscription.
Merchants will not have an opportunity to trick the consumers currently subscribed to a free trial into paying for a service, or even convince the consumers via sales agents to continue their subscription.
According to CNN, the proposal applies to subscriptions that are made online and in-person. This would include service subscriptions from online merchants, cable TV channels, digital streaming platforms, physical and digital magazines, and gym memberships. Both the retail giants and small-scale businesses in the country will be affected by the proposed subscription rule.
FTC Proposal to Protect Customers from Unfair Subscription Practices
In a conference call, FTC chief Lina Khan emphasized that "companies should not be able to manipulate consumers into paying for subscriptions that they don't want." Businesses who would attempt to bypass the new rule would face up to tens of thousands of dollars worth of fines, excluding the amount of money that needs to be refunded to the consumers.
Furthermore, the new FTC proposal states that merchants can offer other products or services to consumers when they choose to cancel their current subscriptions. However, the merchants would still have to provide an option for the consumers whether they agree to hear about the offer or not.
Another important provision of the proposed subscription rule is that merchants must give a yearly notice to their customers about their active subscriptions before charging them. However, this provision only applies to digital goods and services.
The new proposal is part of the FTC's efforts to improve the current Negative Option Rule, which was designed to prevent businesses from continuously charging their customers if the goods or services that they provided are not cancelled or sent back. Thus, the proposed rule will further restrict businesses from committing such practices.
