The Federal Trade Commission announced a final rule requiring businesses to match subscription cancellation processes to enrollment ease. The rule takes effect 180 days after Federal Register publication.
The rule updates the Federal Trade Commission (FTC)'s 1973 Negative Option Rule, addressing subscription and membership practices in the digital economy. The March 2023 notice of proposed rulemaking generated more than 16,000 comments from consumers, federal and state agencies, consumer groups, and trade associations.
The regulation applies to negative option programs across all media platforms. Businesses must:
- Not misrepresent material facts while marketing goods or services.
- Clearly disclose material terms before obtaining billing information.
- Obtain express informed consent before charging consumers.
- Provide simple cancellation mechanisms that immediately halt charges.
"Too often, businesses make people jump through endless hoops just to cancel a subscription," said Commission Chair Lina M. Khan in a press release. "The FTC's rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want."
Two initially proposed requirements were removed from the final rule adopted by the FTC. Those provisions would have required companies to provide consumers with annual subscription reminders and would have placed restrictions on discussing modifications to the subscription during the cancellation process.
The FTC pursued the creation of this rule based on a trend of increasing consumer complaints about recurring subscription policies. The volume of complaints has grown steadily over the past five years. In 2021 the FTC received 42 consumer complaints per day about these practices. In 2024 that number has reach 70 complains per day.
Reference:
Federal Trade Commission. Federal Trade Commission announces final "click-to-cancel" rule making it easier for consumers to end recurring subscriptions and memberships. Published October 16, 2024. Accessed November 4, 2024.
