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In 2024, nearly 70 consumer complaints per day flooded the Federal Trade Commission (FTC) on a hot topic: subscriptions.[1]Federal Trade Commission. “Federal Trade Commission Announces Final “Click-to-Cancel” Rule Making It Easier for Consumers to End Recurring Subscriptions and Memberships.” Accessed on November 7, 2024.
Though the concept of subscriptions dates back to the 15th century, after the invention of the printing press, the system has evolved—and not always for the better.[2]e2open. “The Subscription Business Model – Past, Present, and Future.” Accessed on November 7, 2024. Early newspapers and magazines used subscriptions to secure regular readership, but today, the model is a double-edged sword. While it can be a convenient way to pay for ongoing services—such as gym memberships, media subscriptions, utilities, and more—it often becomes a nightmare when consumers try to cancel.
What should be a few easy clicks or a simple phone call can turn into a time-consuming, confusing mess. So, while subscriptions can offer convenience, they can also become frustrating and a financial burden. After years of abuse, consumers took a stand, and finally, action was taken.
What Is the Click-to-Cancel Rule?
The “Click-to-Cancel” rule refers to a legal requirement that businesses offering subscription-based services or recurring payments make it easy for consumers to cancel a service or subscription online. The process of canceling should be as simple as signing up for the subscription or membership originally. The goal is to keep consumers from being trapped in automatic renewals or difficult-to-cancel services.
The “Click-to-Cancel” rule has become a focus as businesses increasingly adopt digital subscription models. Designed to promote transparency, fairness, and consumer protection, the rule specifically targets subscription services, free trials, and automatic renewals, allowing consumers to cancel subscriptions with a simple click.
The Positive Effects of Click-to-Cancel
The Click-to-Cancel rule addresses transparency, fairness, and convenience in subscription-based services. Here’s how consumers are benefited.
Easier and more transparent cancellations
If a service was subscribed via an online “click-to-accept” process, consumers can now cancel in a similar, straightforward manner. This can remove waiting on hold, sending emails, or navigating complex processes.
Better control over subscriptions
Individuals can easily manage their subscriptions, ensuring they aren’t unexpectedly charged for services they no longer need or use. This is especially important for services with automatic renewal terms or free trials that convert into paid subscriptions.
Protection from hidden fees and unwanted renewals
Unwanted renewals or hidden fees make canceling difficult. Without a clear and easy cancellation process, businesses might continue charging consumers after their initial commitment or free trial period, leading to financial loss. “Click-to-Cancel” helps eliminate these practices.
Prevention of “Dark Patterns”
The rule combats “dark patterns,” which are manipulative design tactics that make it harder to cancel a service. Businesses previously employed strategies such as hiding the cancellation option, making it hard to find, or requiring users to take multiple steps to cancel. The new rule ensures that cancellation is just as easy as subscribing, reducing these deceptive tactics.
More accountability
The rule pushes businesses to be more accountable and transparent, offering clear terms, easily accessible cancellation methods, and fair practices around automatic renewals. This encourages a marketplace where consumer rights are respected.
Penalties for Violating Click-to-Cancel
The punishment for violating the “Click-to-Cancel” rule varies depending on the jurisdiction and laws in that region. However, the general penalties for non-compliance can include:
1. Fines and penalties
Regulatory bodies, such as the FTC or attorneys general, may impose monetary fines on businesses that fail to comply with the cancellation requirements.
2. Refunds and compensation
Businesses that don’t have an easy online cancellation path might be required to offer refunds or reimbursements. This could involve giving refunds for subscriptions that were automatically renewed or charged after the cancellation process was made difficult or misleading.
3. Consumer Lawsuits
Consumers may have the right to file lawsuits against businesses that violate “Click-to-Cancel” requirements. In some cases, class action lawsuits can be filed, especially if a significant number of customers were affected by the violation.
Final Thoughts
Not everyone is on board with the new law. The U.S. Chamber of Commerce, the country’s largest business lobbying group, has said the FTC’s proposal would, in effect, “micromanage business practices.”
But consumers are thrilled. From Amazon Prime to Planet Fitness, customers and clients are breathing a sigh of relief now that a few clicks won’t trap them in an unwanted contract.
FTC Commissioner Lina Khan said in an October 2024 interview, “This is a very positive step in the right direction, just making it less easy for big companies to kind of pull a quick one on you.”[3]NBC News. “FTC moves to take the ‘frustration’ out of canceling subscriptions for consumers.” Accessed on November 7, 2024.
