WASHINGTON DC – Federal Trade Commission (FTC) Announces Easy Cancellation for Subscriptions Final Rule also called the “Click-to-Cancel” Rule making it easier for consumers to end recurring subscriptions and memberships as it was to sign up. Most of the rule’s provisions will go into effect 180 days after it is published in the Federal Register.

1. Benefits of FTC’s Easy Cancellation for Subscriptions Rule for Consumers:

“Too often, businesses make people jump through endless hoops just to cancel a subscription,”

said Commission Chair Lina M. Khan.

“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.”

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2. Types of Subscriptions Affected by the FTC’s Cancellation Rule:

The Commission’s updated rule will apply to almost all negative option programs in any media. Furthermore, the rule will prohibit sellers from:

  • Misrepresenting any material facts while using negative option marketing.
  • Failing to provide important information before obtaining consumers’ billing information and charging them.
  • Failing to obtain consumers’ informed consent to the negative option features before charging them.

3. FTC’s Cancellation for Subscriptions Rule Addressing Negative Option Marketing:

Today’s final rule announced is part of the FTC’s ongoing review of its 1973 Negative Option Rule. The agency is modernizing the rule to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring payment programs. In today’s increasingly digital economy, it’s easier than ever for businesses to sign up consumers for their products and services.

4. Public Response to the FTC’s Final “Click-to-Cancel” Rule:

The Federal Trade Commission (FTC) announced a notice of proposed rulemaking in March 2023. Consequently, this announcement sparked over 16,000 comments from consumers, government agencies, and industry groups.

While negative option marketing programs can be convenient for both sellers and consumers, the FTC receives thousands of complaints about these practices annually. In fact, the number of complaints has been steadily increasing over the past five years. In 2024 alone, the FTC received nearly 70 consumer complaints per day on average, a significant increase from 42 per day in 2021.

4. FTC’s Easy Cancellation for Subscriptions Rule Key Compliance Guidelines:

The final rule will provide a consistent legal framework by prohibiting sellers from:

  • Misrepresenting Material Facts: Sellers cannot misrepresent any important information while marketing goods or services with a negative option feature.
  • Failing to Disclose Material Terms: Sellers must clearly and conspicuously disclose all important terms before obtaining a consumer’s billing information.
  • Failing to Obtain Informed Consent: Sellers must obtain a consumer’s express informed consent to the negative option feature before charging them.
  • Failing to Provide a Simple Cancellation Mechanism: Sellers must provide a simple and easy-to-use mechanism for consumers to cancel the negative option feature and immediately stop charges.

6. Changes Made to The FTC’s Final Rule on Subscriptions:

The Commission evaluated public comments and voted to adopt a final rule with certain changes. Most notably, the Commission dropped two requirements. First, sellers are no longer required to provide annual reminders to consumers about negative option features. Second, sellers can now inform consumers about plan modifications or reasons to keep their subscriptions without explicit permission.

7. Commission Votes on FTC’s Final Rule Publication:

The Commission voted to approve the publication of the final rule in the Federal Register with a narrow margin of 3-2. Notably, Commissioners Melissa Holyoak and Andrew N. Ferguson voted against the approval. Additionally, Commissioner Rebecca Kelly Slaughter issued a separate statement, while Commissioner Holyoak provided a dissenting statement. Commissioner Ferguson’s dissenting statement will be released soon.

In the meantime, FTC staff has developed a fact sheet that summarizes the changes to the rule. The primary staff member handling this matter is Katherine Johnson, who works in the FTC’s Bureau of Consumer Protection.

Final Thoughts on FTC’s Final “Click-to-Cancel” Rule:

FTC’s Easy Cancellation for Subscriptions Final Rule marks a significant step forward in consumer protection, ensuring that individuals can easily manage their subscriptions without unnecessary hurdles. This new “Click-to-Cancel” regulation not only empowers consumers but also holds businesses accountable for transparent practices. Overall, it’s a much-needed reform that promises to enhance the subscription experience and reduce frustration for many users.

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FAQs:

1. What is the FTC unsubscribe rule?

The FTC unsubscribe rule, also known as the “click-to-cancel” rule, requires businesses to make it as easy for consumers to cancel subscriptions as it was to sign up for them.

2. What are FTC guidelines?

FTC guidelines are regulations established by the Federal Trade Commission to protect consumers from deceptive practices in advertising and marketing, ensuring transparency and fairness in business operations.

3. What is the purpose of the click-to-cancel rule proposed by the Federal Trade Commission (FTC)?

The purpose of the click-to-cancel rule is to simplify the cancellation process for consumers, preventing businesses from employing deceptive practices that make it difficult to unsubscribe from services.

4. What is the best way to cancel subscriptions?

The best way to cancel subscriptions is to use the same method you used to sign up, such as an online portal or customer service number, ensuring you follow any specific instructions provided by the service.