Graeme Jennings/Pool via REUTERS
- The federal government has taken notice of difficult-to-cancel subscriptions.
- The FTC wants to outlaw companies that require extra steps to cancel services.
- Insider previously documented how the rise in subscriptions has led to this gigantic headache.
The federal government has taken notice of the difficulty to cancel subscriptions and wants to end the deceptive practices companies use to keep consumers on the hook.
The Federal Trade Commission announced a proposed rule on Thursday that would require companies to make it as easy for consumers to cancel subscriptions and memberships as it was to sign up. Gyms are among the worst offenders in this category, with some even requiring letters to headquarters to end memberships.
Insider previously investigated how companies like Planet Fitness, Adobe, and Vonage have angered consumers by making it easy to sign up for their services but hard to cancel them. News organizations are also notorious offenders when it comes to onerous cancelation procedures. In the past, the FTC has fined companies that commit egregious offenses.
Thursday's announcement makes clear that the agency wants to eliminate the practice entirely.
"It would really say that companies are not able to manipulate consumers into paying for subscriptions that they don't want," FTC Chair Lina Khan told NPR's Morning Edition.
Consumer advocacy groups have long complained about tactics such as "dark patterns," which use web design to make it hard or confusing for a customer to make the proper choice. The proposed rule would outlaw those practices.
Among the other things the rule would require:
- A yearly notification that you are still signed up if the service does not involve the automatic delivery of physical goods
- Companies would need to clearly disclose when a free trial service ends and how someone could cancel a service to avoid an increase in costs or any charges.
- Companies would need to ask consumers if they wanted to hear a last-minute plea before pushing offers when a consumer tries to cancel.
The proposed rule does not have a specific provision applying to refunds if a company were to unwittingly sign up a consumer for a service. The FTC makes it clear that such a step was unnecessary as such a deceptive practice would already be in violation of the rule.
The commission already voted 3-1 to begin this initial process. Now the proposed changes are now open to public comment. The agency will then examine the feedback before considering a final rule.
The FTC says it has concluded that the rule will not have a major economic impact, but the White House has the ability to review proposed rules as well.
In short, the process could be lengthy. Passing a law could cut through that tape, but getting something through Congress has challenges of its own.