FTC wants new ‘click to cancel’ rule for subscription services

Subscriptions can be tough to cancel, with some companies putting consumers on lengthy holds or subjecting them to sales pitches to try to change their minds. It’s such a pain point that subscriptions are among the top sources of complaints at the U.S. Federal Trade Commission.

Now, the FTC said it is proposing a new rule that would require businesses to make it as easy to cancel subscriptions as it was to sign up for them. In other words, if you purchased a magazine subscription online, you should be able to cancel it online just as simply, in the same number of steps — rather than being required to pick up the phone to talk with a customer service rep.

The so-called “click to cancel” provision comes as subscription businesses grow, with many witnessing a boost during the pandemic as consumers signed up for streaming services and fitness brands like Peloton. Older industries such as newspapers, cable-TV providers and real-world gyms still see subscription sales.

Consumers often complain they aren’t always able to cancel easily or are even signed up without knowing what they agreed to, the FTC said.

“The idea here is pretty simple. Companies shouldn’t be able to manipulate consumers into paying for subscriptions they don’t want,” said FTC chair Lina Khan on a call with reporters to discuss the proposed rule.

She added, “This unfortunately is a semi-universal experience for consumers.”

The rule, if enacted, would come with hefty fines for companies that violate it — $50,000 per violation, “which can quickly add up if you think about the number of consumers,” Khan said.

The FTC would also be able to seek redress for consumers, which would help customers recoup the money they spent on subscriptions they didn’t want or couldn’t easily cancel.

The proposal must pass some hurdles before going into effect, such as going through an open comment period, but Khan said the agency is confident about the rule moving forward.

“We are just doing our job to protect consumers from unfair practices,” she said. “We think we are firm legal ground.”