FTC proposes 'Click to Cancel' rule to simplify subscription cancellation process

Federal Trade Commission building

While it's seemingly always easy to sign up for a subscription, it isn't always as easy — or immediately apparent — when it comes time to cancel one.

Currently, there is no standardization for subscription cancellation processes. As a result, customers may be expected to follow lengthy, multi-step cancellation processes, be forced to call a company, or even be expected to cancel a service in person. The FTC hopes to change that.

"Some businesses too often trick consumers into paying for subscriptions they no longer want or didn't sign up for in the first place," FTC Chair Lina M. Khan said in a press release.

"The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties."

The rule comes as part of the FTCs review of the 1973 Negative Option Rule, which is used to combat deceptive practices relating to subscriptions and memberships.

The FTC has shared the changes it hopes to make in a document available on its website.

Its plan would require companies to provide complete and clear information on terminating recurring subscriptions. It also would require explicit definitions of what the customer is signing up for in the first place and penalize any company that misrepresented its goods or services.

Additionally, It would require companies to allow customers who signed up for their subscriptions online to cancel them online rather than via a phone call, email form, or in-person visit.

If the Negative Option Rule is amended, the FTC plans to set clear, enforceable performance-based requirements. Companies that continue engaging in deceptive or difficult subscription practices would be fined and penalized.