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The Federal Trade Commission (FTC) announced Wednesday that it has finalized “click-to-cancel” rules that will require companies to make it easier for consumers to cancel their subscriptions.
The “click to cancel” rule applies to almost all sellers of negative option programs. A negative option program is a form of contract that assumes the consumer has accepted the offer if he or she does not actively take steps to reject it. For example, a subscription that renews automatically unless: cancel.
The rule requires merchants to obtain consumer consent for subscriptions, auto-renewals, and free trials that convert to paid memberships. You should also provide a cancellation process that is as “easy to use” as your registration process.
This prohibits sellers from misrepresenting material facts when marketing products or services with negative option features. Failure to disclose material terms prior to obtaining customer billing information. Failure to obtain consumers’ express informed consent for negative option features prior to billing. We also do not provide an easy mechanism to cancel your subscription or membership and stop charges immediately.
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The FTC first proposed the click-to-cancel rule in March 2023. (Photographer: Stephanie Reynolds/Bloomberg via Getty Images/Getty Images)
The rules also prohibit merchants from asking consumers who register through an app or website to cancel via a chatbot or agent, and businesses can ask consumers who registered in-person to cancel by phone or online. They are also required to provide the means to do so.
“Too often, companies make people jump through endless hoops just to cancel a subscription,” FTC Chair Lina Khan said in a statement. “The FTC’s rules will end these tricks and traps and save Americans time and money. No one should have to pay for services they no longer want.”
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FTC Chair Lina Khan said the “click-to-cancel” rule will help consumers. (Photo Credit: Eugene Gologursky/Getty Images for Fast Company/Getty Images)
Most of the provisions of the final rule become effective 180 days after the rule is published in the Federal Register.
The rule was first proposed in March 2023, and several provisions of the original rule were removed after the FTC’s review following a public comment period. During the comment period, we received more than 16,000 comments from consumers, federal and state government agencies, consumer organizations, and industry associations.
The final rule removed a provision requiring sellers to annually remind consumers about the negative option feature on their subscriptions.
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It also removed a prohibition on merchants telling consumers who are canceling their subscriptions about their reasons for changing their plan or keeping their existing contract without first asking if they want to hear it.
Reuters contributed to this report.