New rule will force firms to make cancelling subscriptions easier
New rule will force firms to make cancelling subscriptions easier

The US Federal Trade Commission (FTC) has adopted a ‘click to cancel’ rule, which aims to make it easier for people to end subscriptions.

It will force companies to make subscription sign-ups and cancellations equally straightforward.

Businesses, including retailers and gyms, will also have to get consent from customers before renewing subscriptions or converting free trials into paid memberships.

The new rule is due to come into effect in around six months’ time.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC chair Lina Khan.

“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.”

Under the new rule, businesses will be banned from forcing customers to go though a chatbot or an agent to cancel subscriptions that were originally signed up to using an app or website

For memberships that customers signed up to in person, businesses will have to offer the option to terminate them by calling by phone or online.

Last year, the FTC took legal action against technology giant Amazon on a related issue.

The lawsuit accused the firm of tricking customers into signing up for Prime subscriptions that renewed automatically and made it difficult for people to cancel.

It also said Amazon’s website designs pushed customers into agreeing to enrol in Prime and have the subscription automatically renewed as they were making purchases.

Amazon has rejected the claims.

The FTC has also taken legal action against software giant Adobe for similar reasons.

It sued the company for allegedly violating consumer protection laws with “hidden” termination fees and a convoluted cancellation process.

The FTC said Adobe had failed to clearly disclose its terms to customers, including the year-long length of a subscription and charges that would be triggered for cancelling early.

Adobe has disputed the allegations.

A law introduced in the UK in May also takes aim at so-called subscriptions traps.

The Digital Markets, Competition and Consumers Act 2024 requires businesses to provide clear information to consumers before they enter a subscription agreement.

It forces sellers to remind customers that a free or low-cost trial is coming to an end.

It also requires companies to ensure customers can easily end a contract.

Source

You May Also Like

Tech giants blocking some Ukraine and Gaza posts under new online rules

Social media companies ​​are blocking wide-ranging content – including posts about the…

Community group says tax hike puts future in doubt

A community project has hit back at the local council for demanding…

Can AI cut humans out of contract negotiations?

By Sean McManus Technology Reporter “Lawyers are tired. They’re bored a lot…

OpenAI staff demand board resign over Sam Altman sacking

By Chris Vallance, Annabelle Liang & Zoe Kleinman Technology and business reporters…

Five reasons for optimism on climate

By Matt McGrath Environment correspondent at COP28 in Dubai It’s easy to…

Starmer and Trump discuss ‘productive’ trade talks

Sir Keir Starmer and Donald Trump discussed “ongoing and productive” trade talks,…

Israeli war cabinet meets to discuss response to Iranian attack

Israel’s war cabinet has met to discuss its response to Iran’s unprecedented…

US-China rivalry spurs investment in space tech

By Jonathan Josephs Business reporter, BBC News The US is “in a…