What You Need to Know About the FTC’s New Rule Making Subscription Cancellations Easier

The Federal Trade Commission (FTC) has introduced a new rule designed to make it easier for consumers to cancel subscriptions and memberships. This regulation aims to tackle growing complaints about companies making the cancellation process confusing or deliberately difficult. The rule, dubbed the “Click to Cancel” provision, is part of a broader initiative to protect consumers from deceptive business practices.

The new rule requires businesses to offer a straightforward cancellation option that is as simple as signing up for the service. If you can subscribe to a service online, you must be able to cancel it through the same method—without needing to navigate lengthy customer service calls or complicated procedures. This is a direct response to companies that have been accused of using “dark patterns,” or deceptive design techniques, to trap consumers in recurring payments.

In addition to simplifying cancellations, the rule mandates that companies provide clear disclosures when consumers sign up for services. They must clearly communicate subscription terms, including how long it lasts, the cost, and any automatic renewal policies. Furthermore, before renewing a subscription, businesses must remind customers about upcoming charges, giving them ample time to cancel if they no longer want the service.

Violations of the new rule could lead to significant penalties, as the FTC steps up its enforcement efforts. Consumers are encouraged to familiarize themselves with their rights under this new regulation and report companies that fail to comply.

This new rule is expected to make a significant impact across industries, from streaming services and gyms to meal delivery and software subscriptions.