The Federal Trade Commission has made it easier for consumers to cancel subscriptions. In a decision that went down party lines, the agency voted to approve a “click-to-cancel” rule that would require providers to make canceling a subscription as easy as signing up for a subscription. First proposed last year, the rulemaking prevents companies from misrepresenting their recurring services and subscriptions, as well as failing to clearly disclose any important terms associated with those offerings.
“Too often, businesses force people to jump through endless hoops to cancel subscriptions,” said Chair Lina Khan. “The FTC’s rule will eliminate these tricks and traps, saving Americans time and money. No one should be stuck paying for a service they no longer want.” After considering more than 16,000 comments on the matter, the FTC decided not to write the final rulemaking it originally proposed.
Most notably, the agency scrapped a proposal that would have required companies to provide consumers with annual reminders for subscription renewals. It also will not mandate a rule that would have forced sellers to obtain the consent of those seeking to cancel subscriptions before telling them about potential modifications to their plan or reasons to continue paying for a service.
A separate statement released by Commissioner Rebecca Slaughter (PDF link) provides insight into this decision. Essentially, the agency felt the FTC Act did not give it the authority to require renewal notices. I will note here that the dissenting opinion (PDF link), written by Republican Commissioner Melissa Holyoak, argues that the entire regulation is overly broad, and accuses the Democratic majority of trying to push through the change before next month’s election.
“Americans understand the importance and value of such a requirement; many have discovered that they or their parents had been paying for years or decades for a completely underused service like the dial-up Internet service of the 1990s,” Slaughter wrote in his statement. “… Of course, we are always mindful that there are limits to our authority under the FTC Act to issue rules under Section 18; sometimes, as here, those limitations prevent us from codifying in a rule those practices that we might prefer to explicitly mandate as a matter of policy.”
Slaughter points out that state and federal lawmakers have the authority to mandate renewal notices, and notes that some states, such as Virginia, have recently gone that route. “The comment record compiled in this rulemaking proceeding strongly supports the wisdom of federal and state legislators giving careful consideration to the adoption of such legislation,” Slaughter writes.
Provided there are no legal challenges to the FTC’s decision, today’s rulemaking will take effect 180 days after it is published in the Federal Register. When the agency moved to ban non-compete clauses earlier this year, a federal judge in Texas issued a nationwide injunction. That decision is still stuck in legal limbo.