California Attorney General Rob Bonta announced support June 26 for proposed Federal Trade Commission (FTC) changes that will make canceling subscriptions, both digital and physical, as easy as signing up for them, according to his office.
The so-called Negative Option Rule is a marketing method for companies to enroll consumers in services with recurring charges, like for subscriptions, and memberships. Consumers’ silence or failure to take action regarding the charges are interpreted by companies as renewals.
“If consumers want to cancel a subscription, they should not have to go on a fishing expedition,” Mr. Bonta said in a press release. “Just as businesses make it easy to sign up for a subscription, they need to respect customers who later want to end that subscription.”
Mr. Bonta’s action is part of a coalition of 26 attorneys general supporting the change. Such would provide more protection to consumers, offering easy and immediate cancellation options, and reminders of upcoming charges, according to the press release.
The attorneys general also urged the FTC to enforce a requirement for businesses to seek additional consent from consumers prior to charging them upon the completion of the free trial. They also asked the commission to broaden the ways that a consumer can cancel a recurring charge.
Typically, businesses provide a 7-day free trial before enrolling customers into their recurring plan. However, a payment method is usually collected prior to the free trial period, and many consumers, who no longer want the service, fail to cancel in time and then are charged, according to the FTC.
The trade commission proposed in March a so-called “click to cancel” provision—which would allow consumers to cancel subscriptions using the same method they used to subscribe.
Under such regulation, consumers would be able to cancel their subscriptions online by themselves without needing to call the company or go through lengthy steps.
The new rule would apply to a wide expanse of products, including digital streaming and e-commerce services, cable TV subscriptions, news outlets, gym memberships, and more.
“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” said FTC Chair Lina Khan in a press release issued in March. “The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”
The FTC’s effort to address the issue started in 2021 when the agency warned companies against using so-called “dark patterns”—meaning misleading ads, making it difficult to cancel subscriptions, or burying key terms and junk fees to trick or trap consumers into subscription services.
According to the agency, the action was taken up due to rising numbers of complaints about deceptive enrollment tactics.
The FTC has since been taking action against Amazon.com, Inc., citing a lengthy period during which the company allegedly enrolled consumers into its Prime program without their consent. Additionally, it accuses the retail giant of deliberately impeding the cancellation process for Prime subscriptions.
Additionally, numerous businesses have been subject to lawsuits by the agency due to allegations of impeding consumers who wish to cancel their services.
