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FTC wants to make it easier for you to cancel subscriptions

2023-03-23 14:59 by


The Federal Trade Commission on Thursday proposed provisions that would remove barriers to canceling subscriptions and recurring payments. The new guidance would work to end the "seemingly never ending struggles to cancel unwanted subscription payment plans," the FTC said in a release.

FTC Chairwoman Lina Khan said the proposal is designed to save consumers time and money, and would impose penalties on companies that use "tricks and traps" to gain subscribers.

"Some businesses too often trick consumers into paying for subscriptions they no longer want or didn't sign up for in the first place," Khan said. "The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one."

The proposal includes two other provisions. The first stipulates that sellers can offer additional products or services when consumers cancel their membership, only after the business has given the consumer the option to agree to hear these additional offers. In other words, businesses should start getting comfortable with rejection. The second provision requires sellers to provide an annual reminder to customers enrolled in a subscription before they are charged. This doesn't apply to programs involving physical goods.

The FTC's effort would revise the Negative Option Rule from 1973, and would echo European Union policy on subscriptions. This will ideally prevent companies from either fooling customers into paying for services they don't want or are done using, commission Chair Lina Khan says. It's also meant to prevent the all-too-common tactic of forcing customers to call or visit a store in order to make the cancellation process difficult.

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