Consumers are in luck… The FTC has issued new regulations to cancel subscriptions with one click
On October 16, the Federal Trade Commission (FTC) made headlines by passing a new regulation known as the “click-to-cancel” law, with a vote of 3-2. This decision aims to address the frustration consumers often experience when trying to cancel memberships, such as those for subscriptions or gym services, which are frequently designed to create obstacles.
FTC Chair Lina Khan emphasized the importance of this regulation, stating, “Companies often make it difficult for people to unsubscribe. The FTC’s new rules will put an end to these tricks and traps.”
The new regulations primarily target automatic renewals that continue unless the consumer actively cancels. The FTC now requires businesses to provide a cancellation method that is easily accessible when consumers wish to terminate their subscriptions. However, the regulations do not specify what that method must be, leaving some room for interpretation.
Additionally, the rules stipulate that companies cannot require consumers to interact with human representatives or virtual agents, like chatbots, unless the consumer agreed to that condition at the time of subscription. If a consumer is instructed to call to cancel, the vendor must be available to handle such requests during normal business hours.
When the FTC introduced this rule proposal in March 2023, it faced opposition from trade groups representing publishers, advertisers, and gaming companies. The News/Media Alliance argued that many states had already implemented their own cancellation procedures, making a federal regulation unnecessary.
In the final vote, the FTC chose to omit certain original provisions, such as the requirement for sellers to send annual reminders about automatic renewals. Now, the emphasis is on providing consumers with prior information regarding subscription payments.
To enforce this regulation, the FTC has the authority to initiate enforcement actions and seek civil penalties against companies that violate the new rules.
However, two Republican commissioners, Melissa Holyoak and Andrew Ferguson, opposed the new regulation during the vote. Holyoak stated in her dissent that the commission lacked the authority to impose such mandates and suggested that the Democratic majority rushed to announce these regulations ahead of the upcoming November elections.
