According to The Hollywood Reporter, The Federal Trade Commission has issued a new rule that stops businesses from implementing unnecessary steps and processes to cancel subscriptions. The “click to cancel” initiative was finalized on Wednesday and will require companies to make it easier for customers to cancel subscriptions and memberships as it is to sign up. In the future companies will have to make it simpler for consumers to cancel and immediately halt all recurring charger consent to convert auto-renewals and free trials to paid enrollments. This new rule will go into effect in 180 days as streaming services aim to slash customer churn rates meaning who momentarily enroll in a service before canceling.
As per The Hollywood Reporter, the new rule is part of crackdown by the FTC on deceptive subscription practices. Last year the agency sued Amazon for allegedly fooling consumers into signing up for its Prime service and then delaying them from canceling their subscription. FTC claimed that Amazon adopted a “manipulative” and “coercive” user interface to fool customers into automatically enrolling and renewing subscriptions. The lawsuit detailed a long process of cancellation requiring users to navigate a four-page, six-click, 15-option cancellation process. This new rule will require platforms to allow the opportunity to cancel in just one click.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC chair Lina M. 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,”
As per The Hollywood Reporter, The Motion Picture Association, in a joint filing with the Entertainment Software Association, is opposing some provisions of the new rule saying that the changes are “unworkable in many respects, and its strict requirements will likely hamper industry, while doing little to protect consumers from the minority of bad actors that engage in the most egregious forms of deceptive negative option marketing.”
Although this is the case several consumers wrote to The Federal Trade Commission supporting the decision.
“I recently experienced difficulties canceling Spotify and Netflix when I encountered unexpected financial crises,” wrote California resident Mary Warner. “I could easily imagine how others could end up paying for months of unwanted subscriptions just because they could not muster the time, effort, energy and assertiveness required. As it was, I still ended up paying for an extra month — beyond my initial attempt to cancel — with both Spotify and Netflix.”
The rule will also bar companies from forcing consumers to call or chat with a live agent to cancel their subscriptions if they enrolled online. “When my daughter signed up for a ‘free trial’ of Netflix I had to make several phone calls to cancel,” wrote Georgia resident Arlene Anderson. “She signed up online, she should be able to cancel online!”