The U.S. Federal Trade Commission (FTC) has introduced a new regulation designed to prevent companies from misleading consumers into subscribing to services and to simplify the process of canceling subscriptions.
The rule targets “negative option marketing,” where a company assumes that if a customer doesn’t explicitly decline a product or service, they agree to pay for it. This tactic is commonly seen with subscription-based services like Netflix, Hulu, and Disney+, where customers are charged continuously unless they actively cancel.
While negative option marketing has been regulated in the past, the new “Click to Cancel” rule strengthens the FTC’s oversight. The key principle is that canceling a service should be just as easy as signing up. For instance, if signing up requires one click, canceling should take the same effort. Similarly, if you enroll in a service in person or over the phone, you must be able to cancel the same way.
The rule also emphasizes transparency. Companies must clearly explain what customers are agreeing to before signing them up, provide essential information upfront, and secure informed consent before collecting billing details. Misleading customers about subscription terms or essential facts is now explicitly prohibited.
“Too often, businesses force people to jump through endless hoops to cancel subscriptions,” said FTC Chair Lina M. Khan. “This rule will eliminate these tricks and traps, saving Americans both time and money. No one should be stuck paying for a service they no longer want.”
The regulation takes effect in 180 days and reflects the FTC’s broader efforts under the Biden administration to hold tech companies accountable. In addition to targeting deceptive subscription practices, the FTC has recently focused on blocking large mergers and banning fake or AI-generated product reviews. For further details on the new rule, visit the FTC’s website.
Source: https://www.ign.com/articles/ftc-ne...ake-it-easier-to-cancel-subscription-services
The rule targets “negative option marketing,” where a company assumes that if a customer doesn’t explicitly decline a product or service, they agree to pay for it. This tactic is commonly seen with subscription-based services like Netflix, Hulu, and Disney+, where customers are charged continuously unless they actively cancel.
While negative option marketing has been regulated in the past, the new “Click to Cancel” rule strengthens the FTC’s oversight. The key principle is that canceling a service should be just as easy as signing up. For instance, if signing up requires one click, canceling should take the same effort. Similarly, if you enroll in a service in person or over the phone, you must be able to cancel the same way.
The rule also emphasizes transparency. Companies must clearly explain what customers are agreeing to before signing them up, provide essential information upfront, and secure informed consent before collecting billing details. Misleading customers about subscription terms or essential facts is now explicitly prohibited.
“Too often, businesses force people to jump through endless hoops to cancel subscriptions,” said FTC Chair Lina M. Khan. “This rule will eliminate these tricks and traps, saving Americans both time and money. No one should be stuck paying for a service they no longer want.”
The regulation takes effect in 180 days and reflects the FTC’s broader efforts under the Biden administration to hold tech companies accountable. In addition to targeting deceptive subscription practices, the FTC has recently focused on blocking large mergers and banning fake or AI-generated product reviews. For further details on the new rule, visit the FTC’s website.
Source: https://www.ign.com/articles/ftc-ne...ake-it-easier-to-cancel-subscription-services
