The cancellation process for subscriptions and memberships can be a difficult task that can be both challenging and confusing to consumers. That’s why the United States Federal Trade Commission (FTC) is proposing a handful of changes that it says will make it easier for consumers to cancel their recurring subscriptions and memberships.
The FTC understands that while there are currently “patchwork of laws and regulations available to the FTC” for protecting consumers, these “do not provide consumers and industry with a consistent legal framework.” As such, the proposed changes to help protect consumers from unwanted subscription payment plans include:
• A Simple Cancellation Mechanism: The proposed rule requires businesses to make it as easy to cancel a subscription as they make it to start one. For example, if a business allows its customers to sign up online, they must provide the same availability to cancel on the same website and preferably in the same number of steps.
• New Requirements Before Additional Offers: To make sure customers don’t feel like their attempts to cancel have been ignored, the proposed rule requires sellers to ask for consent before pitching additional offers in the cancellation process. This means that if the customer says no, sellers must immediately begin the cancellation process.
• Reminders & Confirmations: To prevent ongoing payments without customers being aware, the proposed rule requires sellers to provide an annual reminder to consumers enrolled in such programs.
These changes proposed by the FTC have a wide-ranging impact and could affect numerous online services, apps available on the App Store, and even gym memberships. In addition, the FTC has warned that businesses that continued to use “tricks and traps” in their subscription processes would be subject to harsh penalties.
FTC Chair Lina M. Khan commented that “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 proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money.”
Now, the FTC is ready to start taking comments regarding these proposals before they are implemented. As consumers, it’s important to share our thoughts to ensure that the regulations are fair and provide effective protection from unethical practices and unwanted subscription charges. Share your opinion and help protect yourself and other consumers from trouble in the subscription and membership processing world.