HomeWinBuzzer NewsClick-to-Cancel: New FTC Rule Protects Consumers From Recurring Subscription Renewals

Click-to-Cancel: New FTC Rule Protects Consumers From Recurring Subscription Renewals

The US Federal Trade Commission has introduced a new "click-to-cancel" rule, aimed at eliminating the often complex procedures associated with ending subscriptions.

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The Federal Trade Commission (FTC) just rolled out a rule that might change how we cancel online subscriptions. This regulation, called “click-to-cancel,” will require companies to make subscription cancellations as simple as signing up. As services have increasingly moved to subscription models, consumers have found it more difficult to end payments for services they no longer want.

Under this rule, businesses must provide clear terms and a simple cancellation process. It’s a change that could save consumers time and money, ensuring that they’re no longer stuck paying for services they no longer want or use.

Why Cancelling Subscriptions Has Been a Hassle

For years, customers have been frustrated by companies that make it nearly impossible to stop recurring charges. Many people are familiar with the tactic: signing up is a breeze, but when it comes time to cancel, the process becomes far more complicated. You might be forced to call customer service, only to face long wait times and aggressive sales pitches aimed at keeping you hooked.

The new FTC rule aims to stop that behavior. If you’ve ever wasted time on a lengthy call with customer service, trying to cancel a service you don’t use anymore, this change is for you. According to the FTC, companies will now have to provide an easy cancellation option, preferably in the same format as the sign-up process—whether online or through another method.

What the New Rule Means for Companies

The click-to-cancel rule is specifically aimed at stopping certain practices companies use to keep customers paying. For instance, some businesses intentionally hide or complicate the cancellation process to keep consumers on board. Starting soon, this will no longer be allowed. The rule ensures that businesses clearly disclose subscription terms before charging customers and get their explicit consent before activating any recurring payments.

One detail in the new rule that businesses should pay attention to: they must stop charging customers as soon as the cancellation request is made. No more stalling or misleading tactics to extend unwanted subscriptions.

The FTC’s Broader Plan to Tackle Subscription Abuses

The rule isn’t entirely new—it’s part of the FTC’s continued effort to clean up unfair subscription practices. The commission had already been working on modernizing a 1973 rule related to subscription billing, but this latest addition targets today’s digital subscription economy. As more companies rely on recurring payments to drive revenue, the FTC has seen complaints about misleading or tricky cancellation methods increase. In fact, complaints about subscription services have been on the rise for years, with the FTC receiving thousands of reports annually.

A vote by the FTC finalized the click-to-cancel rule after receiving more than 16,000 public comments earlier this year. During the comment period, both consumers and industry representatives weighed in. Based on feedback, the FTC dropped a requirement that would have forced companies to send annual subscription reminders and also eliminated a proposal to ban companies from trying to retain customers during cancellation, provided the consumer agrees to hear those offers.

Consumer Protection in a Subscription-Heavy World

This ruling comes as many consumers are subscribed to multiple services—from streaming platforms to software tools. Negative option billing practices, which automatically renew unless canceled, have been convenient for companies but a nightmare for some consumers trying to opt out. Now, consumers will be protected from some of the worst abuses, like hidden terms or frustrating cancellation processes.

FTC Responds to Increasing Complaints

The FTC didn’t develop this rule in a vacuum. The commission has been responding to increasing consumer complaints over the years. According to the FTC, complaints about negative option practices have spiked dramatically. In 2024, for instance, they were averaging 70 complaints a day—nearly double the daily complaints from 2021.

Consumers and industry representatives alike contributed to the development of the final rule, submitting thousands of comments earlier this year. While the FTC adjusted some of its initial proposals in response to feedback, the core rule remains focused on protecting consumers from manipulative business practices.

Last Updated on November 7, 2024 2:30 pm CET

Markus Kasanmascheff
Markus Kasanmascheff
Markus has been covering the tech industry for more than 15 years. He is holding a Master´s degree in International Economics and is the founder and managing editor of Winbuzzer.com.
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