FTC moves to eliminate subscription cancellation 'frustration' for consumers

The Federal Trade Commission is announcing a final rule to make it easier for people to cancel subscriptions and memberships they no longer want.

It is called click to cancel.

FTC Commissioner Lina Khan said in an interview Tuesday that the rule is designed so that if customers sign up online, they must be able to cancel on the same website in the same number of steps.

In August, the administration announced it was moving forward with proposed rules as part of a “time is money” crackdown on a number of consumer-oriented hassles.

Khan said the agency now receives about 70 complaints a day about frustrations with canceling subscriptions — a number he said has increased “dramatically” from a few years ago. When the proposed rule was announced last year, Khan said, the agency received nearly 16,000 comments about how canceling subscriptions became a major headache.

“In recent years, we've increasingly seen some companies make it extraordinarily easy to sign up but unreasonably difficult to cancel,” he said Tuesday. “And Americans pay more and waste their time as a result. And so we're going to end this rule.”

He describes many current cancellation systems, which sometimes feature unhelpful automated phone systems or endless transfers between agents, as “doom loops”.

“That's the real basic frustration and feeling that there can be this disrespect of being a consumer, and that's what we want to address and correct,” Khan said. “All people want some fairness and some honesty here, and this rule will do that.”

The US Chamber of Commerce, the nation's largest business lobbying group, said the FTC's proposal would “micromanage business practices.”

“The business thrives on being responsive to customers and has a much better track record of customer service, streamlined paperwork and faster response times than the federal government,” it said in a statement online.

Khan said, these arguments do not last.

“At the end of the day, if a business relies on tricking or tricking people into subscriptions, that's not a good business model and it's not what we should stand for,” he said.

Khan and the FTC have already taken legal action against Amazon's Prime division alleging that it is luring customers into subscriptions that the FTC's complaint is extraordinarily difficult to overturn.

Amazon has denied wrongdoing. The case is scheduled to go to trial next summer.

Haley Nelson told NBC News that she is a victim of the Planet Fitness cancellation system. Nelson, a Minnesota resident, said she signed up for a gym membership but only used it once after deciding the facility near her was too busy.

But when she went to cancel, she learned she would have to do it in person — something she said she didn't have the time or desire to do. He said he let his membership run automatically for months before finally finding a window to return to the gym to cancel.

In a statement, Planet Fitness said members can cancel “in person or by written mail notification” at their home clubs.

“Our standard cancellation policy states that cancellations are required in person or by written mail notification to your home club,” it said. “Some members have the ability to cancel their membership online based on their membership type and the location of their home club. We are continually expanding this functionality for additional convenience.”

The company says 30% of its “joins” are former Planet Fitness members.

Nelson said he would be grateful for the changes Khan and the FTC are proposing.

“If they could make it as easy to get out of membership as it is to join, that would certainly be very helpful for people like us who are paying for membership, because it's not as difficult to figure out. Find out how to cancel a membership you joined three or four months ago,” he said.

He added: “It's a very positive step in the right direction, just making it less easy for big companies to pull a fast one.”