The US Federal Trade Commission (FTC) has adopted a ‘click to cancel’ rule aimed at making it easier for people to end subscriptions.
This will force companies to make subscription registrations and cancellations equally straightforward.
Businesses, including retailers and gyms, must obtain consent from customers before renewing subscriptions or converting free trials to paid memberships.
The new rule will come into effect in six months.
“Too often, businesses make people go through endless hoops to get them to cancel a subscription,” said FTC Chair Lina Kahn.
“The FTC’s rule will end these tricks and traps, saving Americans time and money. No one should be stuck paying for a service they don’t want.
Under the new rule, businesses will be prohibited from forcing customers through a chatbot or agent to cancel subscriptions they originally signed up for using an app or website.
Businesses must offer customers the option to cancel memberships signed up in person, by phone or online.
last year, FTC takes legal action against tech giant Amazon.
The suit accused the company of tricking customers into signing up for auto-renewing Prime subscriptions and making it harder for people to cancel.
Amazon’s website designs prompted customers to agree to sign up for Prime and it said the subscription would automatically renew when they made a purchase.
Amazon has denied the claims.
The FTC has also picked up Legal action against software giant Adobe For similar reasons.
It sued the company for violating consumer protection laws with “hidden” termination fees and a convoluted cancellation process.
The FTC said Adobe failed to clearly disclose its terms to customers, including a one-year subscription and fees that trigger early cancellations.
Adobe has denied the allegations.
A law introduced in the UK in May aims to tackle so-called subscription traps.
The Digital Markets, Competition and Consumer Act 2024 requires businesses to provide consumers with clear information before entering into a subscription agreement.
This forces marketers to remind customers that a free or low-cost trial is coming to an end.
Companies should ensure that customers can easily complete the contract.
