FTC Adds Click-to-Cancel Provision to Negative Option Rule

The Federal Trade Commission has implemented a consumer “click-to-cancel” rule that requires sellers to make it as simple to cancel subscriptions or memberships as it was to sign up. The FTC vote was 3 to 2, along party lines, in favor of implementing the rule, which makes it easier to divest of unwanted, recurring bills. “Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC Chair 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.”

“The rule also will prohibit sellers from misrepresenting any material facts while using negative option marketing; require sellers to provide important information before obtaining consumers’ billing information and charging them; and require sellers to get consumers’ informed consent to the negative option features before charging them,” according to the FTC news post.

“The 230-page rule runs the gamut from streamers to cable TV subscriptions to home shopping networks and gym memberships,” details Deadline, which says the FTC “acted after receiving more than 16,000 comments from the public.”

The Negative Option Final Rule updates the FTC’s 1973 Negative Option Rule, which the agency is modernizing to combat deceptive practices related to recurring-payment programs in a digital economy that has made it easier than ever for businesses to sign people up for products and services.

Negative options come in various forms, but share one feature: allowing the seller “to interpret a customer’s silence, or failure to take an affirmative action, as acceptance of an offer,” Deadline writes.

The rule also specifies that “consumers can’t be required to interact with a live or virtual representative, such as a chatbot, unless they consented to that step when they initiated the subscription,” according to The Wall Street Journal.

The new rule was enacted a month after California passed click-to-cancel legislation. Most provisions of the FTC’s final rule will go into effect 180 days after it is published in the Federal Register.

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