The Federal Trade Commission is announcing a finalized rule to make it easier for people to cancel subscriptions and memberships they just don’t want anymore.
It’s called click to cancel.
FTC Commissioner Lina Khan said in an interview Tuesday that the rule is designed so that if consumers signed up online, they must also be able to cancel on the same website in the same number of steps.
In August, the administration announced it was moving forward on the proposed rule as part of its “Time Is Money” crackdown on a host of consumer-oriented hassles.
Khan said the agency now gets around 70 complaints every day related to frustrations around canceling subscriptions — a number she said has increased “dramatically” from just a few years ago. When the proposed rule was announced last year, Khan said, the agency got about 16,000 comments expressing how canceling subscriptions had become a headache at best.
“Over recent years, we’ve seen increasingly that some firms make it extraordinarily easy to sign up but absurdly difficult to cancel,” she said Tuesday. “And Americans end up paying more money and wasting their time as a result. And so that’s what we’re going to put an end to with this rule.”
She described many current cancellation systems, which sometimes feature either unhelpful automated phone systems or endless transfers between agents, as a “doom loop.”
“It’s this real fundamental frustration and this feeling that there can be this indignity of being a consumer, and that’s what we want to address and make right,” Khan said. “All people want here is some fairness and some honesty, and that’s what this rule will do.”
The U.S. Chamber of Commerce, the country’s largest business lobbying group, has said the FTC’s proposal would in effect “micromanage business practices.”
“Businesses succeed by being responsive to customers and have a far better track record of customer service, streamlined paperwork and prompt response times than the federal government,” it said in a statement online.
Khan said those arguments don’t hold up.
“At the end of the day, if a business is dependent on tricking or trapping people into subscriptions, that’s not a good business model, and that’s not one that we should stand for,” she said.
Khan and the FTC have already taken legal action against Amazon’s Prime division over accusations that it is luring customers into subscriptions that the FTC alleges are extraordinarily difficult to cancel.
Amazon has denied wrongdoing. The suit is scheduled to go to trial next summer.
Haley Nelson told NBC News she was a victim of Planet Fitness’ cancellation system. Nelson, a Minnesota resident, said she signed up for the gym membership but ended up using it only one time after she decided the facility nearest her was too busy.
But when she went to cancel, she learned she would have to do so in person — which she said she didn’t have the time or desire to do. She said she ended up letting her membership run on autopay for months before she finally found a window to drive back to the gym to cancel.
In a statement, Planet Fitness said members can cancel “in person or via written mail notification” to their home clubs.
“Some members have the ability to cancel their membership online based on their membership type and location of their home club,” it said.
Nelson said she’d be grateful for the changes Khan and the FTC are proposing.
“If they were to make it just as easy to get out of a membership as it is to join it, it definitely would be very helpful for people like us who are paying for the memberships, just because it’s not as daunting to try to figure out how the heck to cancel this membership that you joined, you know, three or four months ago,” she said.
She added: “This is a very positive step in the right direction, just making it less easy for big companies to kind of pull a quick one on you.”
