US ‘click to cancel’ rule to ban subscription traps
The U.S. Federal Trade Commission (FTC) has implemented a new ‘click to cancel’ rule, designed to simplify the process of ending subscriptions. The rule will require businesses to make subscription cancellations as easy as sign-ups. This includes companies like retailers and gyms, which will also need to obtain customer consent before automatically renewing subscriptions or converting free trials into paid plans.
The rule is set to take effect in about six months. FTC Chair Lina Khan commented, “Too often, businesses make it overly difficult to cancel subscriptions. The new rule will put an end to these obstacles, saving Americans time and money. No one should be forced to pay for a service they no longer want.”
Key aspects of the rule include banning companies from requiring customers to cancel subscriptions through chatbots or agents if the original sign-up was done online or via an app. Additionally, businesses that sign customers up in person must allow them to cancel by phone or online.
The FTC has previously taken legal action in similar cases, including a lawsuit against Amazon in 2023. The lawsuit accused Amazon of tricking customers into signing up for Prime subscriptions that auto-renewed and were hard to cancel. Amazon has denied these claims. The FTC also sued Adobe for allegedly hiding cancellation fees and creating a complex process for ending subscriptions, which the company has disputed. The U.K. has introduced a similar law under the Digital Markets, Competition and Consumers Act 2024, aimed at preventing “subscription traps.” It requires businesses to provide clear terms to consumers, remind them when free trials are ending, and make it easy to cancel subscriptions.
