California Attorney General Rob Bonta has expressed his support for proposed changes by the Federal Trade Commission (FTC) that aim to make canceling subscriptions easier for consumers. The changes, known as the Negative Option Rule, pertain to a marketing method where companies automatically enroll consumers in recurring services, such as subscriptions or memberships, and interpret their silence or lack of action as consent for renewal.
According to a press release from Mr. Bonta’s office, he believes that if consumers want to cancel a subscription, they should not have to go through a difficult and time-consuming process. He argues that just as businesses make it easy for customers to sign up for a subscription, they should also respect their decision to end it.
To further protect consumers, a coalition of 26 attorneys general, including Mr. Bonta, has urged the FTC to enforce additional measures. They propose that businesses should seek explicit consent from consumers before charging them at the end of a free trial. They also recommend expanding the methods through which consumers can cancel recurring charges.
Typically, businesses offer a 7-day free trial period before automatically enrolling customers into a recurring plan. However, the FTC highlights that often a payment method is collected prior to the trial period, leading many consumers who no longer want the service to fail to cancel on time and consequently be charged.
In March, the FTC proposed a “click to cancel” provision, which offers consumers the ability to cancel their subscriptions using the same method they used to subscribe. This provision would allow consumers to cancel online without the need for phone calls or complicated steps.
If implemented, the new regulation would cover a wide range of products, including digital streaming and e-commerce services, cable TV subscriptions, news outlets, and gym memberships.
FTC Chair Lina Khan has expressed her support for the proposed changes, stating that they would save consumers time and money. She also warns that businesses found to be using deceptive tactics would face significant penalties.
The FTC’s actions stem from a growing number of complaints regarding deceptive enrollment tactics. Notably, the agency has taken action against Amazon.com, Inc., accusing the retail giant of enrolling consumers into its Prime program without their consent and deliberately making it difficult for them to cancel their subscriptions.
Various businesses have faced lawsuits from the FTC due to allegations of hindering consumers who try to cancel their services.
Overall, the proposed changes aim to provide consumers with greater protection and more straightforward options when canceling subscriptions. By making the cancellation process as easy as signing up, consumers will have more control over their subscriptions, ensuring that they are not trapped in unwanted charges.