“Click To Cancel” May Soon Be A Reality

The U.S. Federal Trade Commission (FTC) has proposed a new provision that would require companies offering subscription services to include a "click to cancel" option for consumers. This proposal is aimed at reducing the number of consumers who inadvertently sign up for recurring payments without realizing it, a practice that has become increasingly common in the digital age.

Under the proposed rule, companies that offer subscription services would be required to provide consumers with a clear and conspicuous "click to cancel" option that is easily accessible and visible on their website or app. The option must be clearly labeled and prominently displayed, and consumers must be able to cancel their subscription with a single click.

The FTC's proposal is a response to the growing problem of "subscription traps," where consumers sign up for a free trial or a low-cost introductory offer but are then automatically enrolled in a recurring payment plan. In many cases, consumers are unaware of these recurring payments until they receive their credit card statement, leading to frustration and confusion. “The rule change would formally ban companies from offering a free or reduced trial without making it clear that customers will be automatically billed for the full price soon after. It would also ban companies from making it much, much harder to cancel a payment than to sign up for one,” wrote Sarah Scier for Nieman Lab.

The FTC's proposal is intended to address this problem by giving consumers a simple and easy way to cancel their subscription without having to jump through hoops or navigate a complicated cancellation process. As Andrew Smith, Director of the FTC's Bureau of Consumer Protection, noted in a statement, "the proposed rule would make it easier for consumers to cancel subscriptions and stop recurring charges that they did not authorize."

The proposal would also change the process of cancellation, for example: “The proposed rule would allow sellers to pitch additional offers or modifications when a consumer tries to cancel their enrollment. But before making such pitches, sellers must first ask consumers whether they want to hear them. In other words, a seller must take ‘no’ for an answer and upon hearing ‘no’ must immediately implement the cancellation process.” 

The "click to cancel" proposal has been well received by consumer advocates, who have long been calling for stronger protections for consumers in the digital marketplace. The FTC has created a simplified fact sheet for anyone curious about how far the policy would go.

However, the proposal has also been met with some resistance from companies that offer subscription services, who argue that the "click to cancel" requirement could be burdensome and costly to implement. Some companies have suggested that there are already sufficient consumer protections in place and that the FTC's proposal could result in unintended consequences, such as reducing the availability of subscription services.

The FTC's proposal is now open for public comment, and the agency is expected to consider feedback from stakeholders before finalizing the rule. If adopted, the "click to cancel" provision would represent a significant step forward in protecting consumers from the deceptive and unfair practices associated with subscription services, and over-reliance on task paralysis as a business model.