Click-to-Cancel: New FTC ruling outlaws deceptive subscription practices

Many are all too familiar with the hoops, phone calls, and confusing semantics associated with trying to cancel a subscription or membership. Thankfully, to give users their time and money back, the FTC has announced a rule that requires businesses to make canceling enrollment as easy as signing up. Once the rule is published in the Federal Register, businesses will have 180 days to comply, and after that point, they could face repercussions for deceptive practices.

This ruling will affect virtually every business employing Negative Option practices. The most familiar example is the “free trial” promotion, which requires users to enter payment information before the company grants them access to the service. As part of the ruling, businesses must also ensure that the language surrounding their service is straightforward and truthfully represents what the user gets when signing up. Furthermore, the FTC requires that if a user signs up online, they must be able to cancel online. The FTC goes a step further and rules that even if a user signs up for a service in person, there has to be an option to cancel over the phone or online.

This ruling has been coming for a long time. The problem of forgetting to cancel subscriptions and memberships has not only cost millions of users money in unwanted services but has ironically progressed to the point of companies charging fees to cancel services for you. Hopefully, as the FTC expands its understanding of the digital economy, we will see more protective measures that will shield users from deceptive business practices.