Click-to-Cancel Rule from FTC is Gaining Steam

Businesses that let new customers sign up via a click of the mouse may be forced to make cancellation of a subscription just as easy.

The so-called click-to-cancel rule proposed by the Federal Trade Commission (FTC) is on track to be finalized by this fall. Consumer rights advocates urged the commission to update its 1973 negative option rule due to companies making it increasingly difficult to cancel subscriptions.

The rule would affect a wide range of industries including e-biz. The reg calls for three major changes to the way businesses handle customers’ requests to cancel:

• a simple cancellation mechanism that requires “businesses to make it at least as easy to cancel a subscription as it was to start it. For example, if you can sign up online, you must be able to cancel on the same website, in the same number of steps.”
• sellers will need to first ask customers if they want to hear about any offers or incentives to remain a customer. If the response is “no,” the seller must continue the cancelation process, and
• consumers enrolled in negative option programs involving anything other than physical goods must receive an annual reminder before being renewed.

The FTC receives thousands of complaints every year about businesses billing customers without their consent and making it difficult to near-impossible to cancel. These tactics are used by companies selling everything from cosmetics to newspapers to gym memberships.

Click-to-Cancel has Bipartisan Support

Like any significant federal reg that’s finalized late in a presidential election year, there’s always a chance of a new administration and Congress putting the kibosh on it. But the GOP is less beholden to corporate lobbyists and the Chamber of Commerce these days, so click-to-cancel is one reg change that could fly under the radar and pass muster with a majority of Democrat and Republican lawmakers. Or if not the currently written rule, possibly a pared-down one that provides relief for consumers.

J.D. Vance likes a lot of the initiatives the FTC put into action under chair Lina Khan despite her Democrat credentials. At least two billionaire Democrat donors urged Kamala Harris to fire Khan if she’s elected president. Harris pursued anti-trust cases as a district attorney and could choose to support Khan.

Legal challenges are the biggest threat to the rule. Opponents will sue to stop it the minute it’s finalized. We’ll keep you posted.