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The US Federal Trade Commission is proposing a formal ban on subscriptions that are simple to start but difficult to stop. This morning, it announced a notice of proposed rulemaking it dubs \u201cclick to cancel,\u201d requiring companies to make ending a subscription equivalently simple to signing up for one. That includes letting people use the same method for both actions \u2014 so a business can\u2019t, for instance, let someone sign up for a service online but make them call a phone number to cancel.<\/p>\n<\/div>\n
The rule has a couple of other provisions. Many companies try to keep subscribers by offering special deals or perks, and they\u2019re still allowed to do that, but they must offer an up-front opt-out that lets customers bypass the sales pitches. They also have to annually remind consumers that they\u2019re enrolled in what are dubbed \u201cnegative option\u201d programs, or programs where failing to cancel something is considered an agreement to keep paying, for anything but physical goods. Now, the agency has opened a public comment period for the proposal, after which it will potentially make revisions and pass the final regulation.<\/p>\n<\/div>\n
\u201cCompanies should not be able to manipulate consumers into paying for subscriptions that they don\u2019t want,\u201d FTC chair Lina Khan told reporters in advance of the announcement. \u201cWe get countless complaints about this.\u201d<\/p>\n<\/div>\n
\u201cWe get countless complaints about this.\u201d<\/p>\n<\/div>\n<\/div>\n
The FTC already considered what some critics dub \u201croach motel\u201d practices<\/a> unlawful under bans on unfair or deceptive business practices, and under Khan, it\u2019s gone after companies employing \u201cdark patterns\u201d<\/a> \u2014\u00a0a blanket term for interfaces that deceive or manipulate people. Among other incidents, last year, it settled a $100 million lawsuit<\/a> with telecom provider Vonage, which the FTC alleged created an artificially difficult cancellation process to lock people into subscriptions.<\/p>\n<\/div>\n But a formal ban sets a codified standard for what\u2019s unlawful and gives the FTC more flexibility to demand restitution from companies that break the rule. The agency can recover around $50,000 per individual violation of a consumer\u2019s rights, and consumer lawsuits can recover damages for lost funds and potentially wasted time. And formal standards are increasingly relevant as more and more companies push ongoing service models over ownership. \u201cWe\u2019ve seen over the last few years in particular a shift that companies are making more and more to subscription models,\u201d Khan says. \u201cThat shift to greater subscriptions has created more opportunity for mischief.\u201d<\/p>\n<\/div>\n