FTC Rule Makes Cancelling Subscriptions Easier for Consumers

On October 16, 2024, the Federal Trade Commission (FTC) in the United States adopted a significant rule aimed at protecting consumers from complicated subscription cancellation processes. The 'click-to-cancel' rule requires businesses to ensure that canceling a subscription is as easy as signing up for one. This initiative is part of a broader effort to address consumer-related issues and was included in the Biden administration's 'Time is Money' initiative, which seeks to reduce consumer hassles across various industries. The rule prohibits misleading practices regarding subscriptions and mandates that companies obtain explicit consent from consumers before charging for memberships or auto-renewals. Additionally, businesses must clearly disclose the end dates of free trials and promotional offers, allowing consumers to make informed decisions. The FTC received over 16,000 comments on the proposal, indicating strong public interest and concern regarding subscription practices. FTC Chair Lina Khan emphasized the importance of this rule, stating that consumers should not have to navigate complex processes to cancel services they no longer want. The rule aims to save consumers time and money by eliminating deceptive practices that often trap them into unwanted subscriptions. Despite the FTC's efforts, the rule has faced criticism from business groups and some commissioners who argue that it imposes excessive regulations. Nevertheless, the finalized rule is expected to take effect 180 days after publication, marking a significant step toward enhancing consumer rights in the subscription economy.