


The Federal Trade Commission announced a final rule that would require retailers to make canceling a subscription just as easy as it was to sign up for.
The so-called “click-to-cancel” rule was announced on Wednesday and applies to subscription services and memberships. It was developed after public comment and is expected to go into effect 180 days after it is published in the Federal Register.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC Chairwoman Lina Khan. “The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
According to the FTC, the new rule also will require sellers to provide key information before getting consumers’ billing information and charging them.
The notice of proposed rulemaking for the click-to-cancel rule was first announced in March of last year and resulted in more than 16,000 comments from consumer groups, consumers, and entities like trade organizations, according to the agency.
The rule passed in a 3-2 vote, with the two Republicans on the FTC voting against it.
Commissioner Melissa Holyoak, one of those who voted against the rule, explained in a dissent that she had concerns about the FTC’s authority to implement the rule and cited Article I of the Constitution, which gives Congress legislative powers. She also said the rule smacks of election-year politics.
“The likely unlawful character of the rule is compounded by the Majority’s race to cross the finish line,” Holyoak wrote. “Why the rush? There is a simple explanation. Less than a month from election day, the Chair is hurrying to finish a rule that follows through on a campaign pledge made by the Chair’s favored presidential candidate.”
The latest rule is part of a broader administration-wide effort to crack down on corporate practices that it deems unfair to consumers.
In August, the White House announced a new multi-agency initiative aimed at curbing the use of corporate practices that aggravate customers by wasting their time, such as long hold times to cancel subscriptions and the overuse of automated chatbots.
“The administration is cracking down on all the ways that companies through paperwork, hold times, and general aggravation waste people’s time and then really hold on to their money,” Domestic Policy Council Director Neera Tanden told reporters at the time.
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The Consumer Financial Protection Bureau also announced new guidance last year to block large banks from charging excessive or “junk” fees for providing basic customer service.
The CFPB also announced a rule this year that would force most banks to cap credit card late fees at $8. The CFPB said fees cost consumers some $14 billion per year and that the new rule would go far toward curbing that, saving consumers an estimated $10 billion annually.