FEDERAL TRADE COMMISSION ANNOUNCES NEW RULE TO MAKE IT EASIER TO CANCEL SUBSCRIPTIONS

The Hill

 

FTC announces rule to make it easier to cancel subscriptions

by Dominick Mastrangelo - 10/16/24 10:25 AM ET

 

The Federal Trade Commission is taking steps to make it easier for consumers to cancel digital subscriptions.

 

The department will soon implement a “final click to cancel rule,” it announced Wednesday, which will require sellers to make it “as easy for consumers to cancel their enrollment as it was to sign up.”

 

Most of the final rule’s provisions will go into effect 180 days after it is published in the Federal Register, the department said.

 

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Chair Lina Khan said in a statement. “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.”

 

The new regulation is part of the FTC’s ongoing review of the Negative Option Rule, which aims to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs in the digital economy.

 

It comes as more major media and tech companies, such as Netflix, Disney and Warner Bros. Discovery, work to shore up their businesses around streaming and combat the amount of users who subscribe to a streaming or digital service for a short period of time before canceling, known as “churn rate.”

 

A recent Deloitte study found the average household in the U.S. pays just more than $60 per month for four streaming services, The Hill previously reported.

 

Media business observers and government watchdogs have for years warned that an accelerating trend of consolidation in the tech and media space is likely to drive subscription costs up for news, sports and entertainment content and limit choices for consumers.

 

“While negative option marketing programs can be convenient for sellers and consumers, the FTC receives thousands of complaints about negative option and recurring subscription practices each year,” the department said, noting the number of complaints it has been receiving has been steadily increasing over the past five years.