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As more and more companies switch their apps and services to subscription models, you might have found it increasingly difficult to cancel your subscription and end the payments. Most of us have struggled with a company that makes it near-impossible to stop the charges, but that could soon become a thing of the past thanks to new consumer-friendly rules that are about to come into effect.
In a press release, the FTC has announced that businesses will have to make it as easy for consumers to end a subscription as it is to sign up for one. The new 'click-to-cancel' rule is designed to address complaints about 'negative option' billing – that is, subscriptions and recurring payments where you must take action to have them canceled.
Right now, some companies make it as difficult as possible to end a subscription. Instead of allowing you to end it online, for example, they might make you call a phone number where a sales representative will cajole you with offers and other tactics designed to keep you spending. While signing up for a recurring payment can take seconds, canceling one can take hours – or longer.
Once the click-to-cancel rule comes into effect in roughly 180 days’ time, that should all change. The FTC says its new guidelines will prohibit companies from engaging in the following practices:
- Misrepresenting any material fact made while marketing goods or services with a negative option feature
- Failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature
- Failing to obtain a consumer’s express informed consent to the negative option feature before charging the consumer
- Failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.
The FTC says it opted against enacting other rules. These include the requirement for companies to send annual subscription reminders to customers, as well as a ban on firms suggesting reasons for you to keep paying when you attempt to cancel a subscription if you haven’t previously asked to hear about these reasons.
Commenting on the news, FTC chair Lina M. Khan said, “Too often, businesses make people jump through endless hoops just to cancel a subscription. The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
With subscriptions becoming an increasingly common way for companies to bring in revenue, complaints have been rising at an equally steep rate, with the FTC saying it now receives an average of 70 complaints a day about shady recurring payment practices. Hopefully the new rules will put a stop to some of the most egregious examples and make it far easier to get more control over your money.