FTC proposes a Negative Option Rule to help consumers ditch subscriptions

The Federal Trade Commission on Thursday proposed an amendment to the regulation that would make it simpler for customers to end recurring subscriptions.

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The "click to cancel" provision would require companies to make the cancellation process simpler by enabling customers to end services in the same way they began them. For instance, if a customer signed up for a subscription on a website, they would need to be able to do so online. This is rather than over the phone or in person.

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The idea would also compel retailers to notify customers each year before automatically renewing their subscriptions. In addition, retailers would be required to ask customers who are canceling their subscriptions if they want to hear about other offers before pitching them.

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The commission approved the proposed regulation notice 3-1, with Commissioner Christine Wilson voting against it because it was too broad as worded.

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According to the federal office, thousands of consumer complaints about being charged for recurring services without their permission or dealing with complicated cancellation policies are received every year.

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FTC Chair Lina Khan cited reports of cellphone plans requiring calling a customer service agent "who will keep you on the line to try to convince you to stay" and gyms requiring members to cancel their subscriptions in person or via certified or notarized mail as examples of practices that need to be addressed.

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These companies, according to Khan, "are banking that clients would be too impatient, busy, or bewildered to jump through all the hoops."

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The federal agency announced that the rules and regulations in place "do not provide consumers and industry with a uniform legal framework."

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The 1973 Negative Option Rule, which requires sellers to disclose the conditions of sale before consumers subscribe and offer information on how consumers can cancel, is being reviewed by the government as part of this notice of proposed rulemaking.

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The law does not, however, restrict other marketing strategies that make it difficult to cancel, which the FTC is working to modify. Businesses can continue billing customers for services indefinitely unless they cancel.

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Following its publication in the Federal Register, the government's official journal, the public will have 60 days to comment on the latest plan.

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The FTC has not yet determined when the proposal will be publicized and open to public comment, according to a spoke It is unclear at this time when the final rule might come into effect.