Personal Finance

FTC eyes easier cancellations for free trials, subscriptions

Washington, UNITED STATES: The US Federal Trade Commission (FTC) building is seen 19 September 2006 in Washington, DC.
Paul J. Richards/AFP via Getty Images
The U.S. Federal Trade Commission (FTC) building in Washington is seen in this 2006 file photo.

The Federal Trade Commission (FTC) is eying new regulations to make canceling free trials and subscriptions easier for consumers. 

The FTC said in a release on Thursday that its “click to cancel” proposal would require sellers to make canceling an enrollment more straightforward to help consumers with “seemingly never-ending struggles” in ending subscriptions. 

FTC Chairwoman Lina Khan said the proposal is designed to save consumers time and money, and would impose penalties on companies that use “tricks and traps” to gain subscribers. 

“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” Khan said. “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one.” 

Under the proposed regulations, a consumer would have to be able to cancel a subscription through the same method they used to enroll, like using the same website and going through the same number of steps. 

The proposals would allow sellers to make additional offers or modifications to a subscription to try to encourage a consumer to not unsubscribe, but they would need to first ask the consumer if they want to hear the offer. 

Sellers would also need to provide annual reminders to consumers enrolled in their programs that a subscription is going to be automatically renewed unless the service provides physical goods. 

The release states that the FTC approved the publication of its proposed rules in a 3-1 vote. 

Commissioner Christine Wilson, the lone dissenter, said in a statement that she opposed the proposals because she felt their scope would include misrepresentations for a product or service that are unrelated to a “negative option” feature, in which consumers need to actively decline a subscription to not have it. 

Wilson said what the proposals would address is significantly more than the issues mentioned in the FTC’s 2019 Advance Notice of Proposed Rulemaking, in which the FTC first gathered comments it received recommending amendments to its negative option rule. 

Khan said in a joint statement with Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya that the rules would grant the FTC the ability to more efficiently enforce its rules, create a deterrent for violations through civil penalties and allow the FTC to return money to consumers who were wronged. 

“The proposed rule would also provide clarity across industries about sellers’ obligations when engaging in negative option marketing,” the commissioners said. 

The public will be able to submit comments on the proposals electronically once they are published in the Federal Register.

Tags Federal Trade Commission FTC Lina Khan Lina Khan Subscriptions

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