US subscription rules to tackle 'click to cancel' trap
The US Federal Trade Commission (FTC) has adopted a 'click to cancel' rule, which aims to make it easier for people to end subscriptions.
This will force companies to make subscription sign-up and cancellation equally easy
Businesses, including retailers and gyms, must also obtain consent from customers before renewing subscriptions or converting free trials to paid memberships.
The new rules are expected to come into effect in about six months.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said Lina Khan, chair of the FTC.
“The FTC's rule will end these tricks and traps, saving Americans time and money. No one should be stuck paying for services they no longer want.”
Under the new rules, businesses will be prohibited from forcing customers to go through a chatbot or an agent to cancel a subscription signed up to use an app or website.
For memberships that customers sign up for in person, businesses must give them the option to cancel by calling them over the phone or online.
last year, The FTC has taken legal action against tech giant Amazon in a related matter.
The lawsuit accuses the firm of tricking customers into signing up for Prime subscriptions that automatically renew and make it difficult for people to cancel.
It also said Amazon's website designs forced customers to agree to enroll in Prime and automatically renew subscriptions as they made purchases.
Amazon rejected the claim.
FTC has also taken Legal action against software giant Adobe For similar reasons.
It sued the company for alleged violations of consumer protection laws, including “hidden” termination fees and a complicated cancellation process.
The FTC said Adobe failed to clearly disclose its terms to customers, including the annual length of a subscription and the charges for early cancellation.
Adobe has disputed the allegations.
A law introduced in the UK in May also targets so-called subscription traps.
The Digital Markets, Competition and Consumer Act 2024 requires businesses to provide customers with clear information before they enter into a subscription agreement.
This forces sellers to remind customers that a free or low-cost trial is about to end.
Companies also need it to ensure that customers can easily conclude a contract.