California AG Supports FTC Changes to Make Canceling Unwanted Subscriptions Easier
California Attorney General Rob Bonta has announced his support for proposed changes by the Federal Trade Commission (FTC) that aim to make canceling subscriptions, both digital and physical, as easy as signing up for them. Bonta’s backing is part of a coalition of 26 attorneys general who support the amendments. The proposed rule, known as the Negative Option Rule, targets the marketing practice where companies enroll consumers in services with recurring charges, such as subscriptions and memberships, and interpret consumers’ silence or failure to take action as renewals.
Bonta highlighted the need to make canceling subscriptions a hassle-free process for consumers. He stated in a press release, If consumers want to cancel a subscription, they should not have to go on a fishing expedition. Just as businesses make it easy to sign up for a subscription, they need to respect customers who later want to end that subscription.
The attorneys general are advocating for increased consumer protection through the implementation of easy and immediate cancellation options, as well as reminders of upcoming charges. They have also called on the FTC to require businesses to seek additional consent from consumers before charging them at the end of a free trial period. Furthermore, the coalition urged the commission to expand the methods through which consumers can cancel recurring charges.
Currently, businesses typically offer a 7-day free trial before enrolling customers in their recurring plans. However, many consumers who no longer wish to continue the service fail to cancel in time and subsequently get charged. The FTC’s proposed click to cancel provision would allow consumers to cancel subscriptions using the same method they used to sign up, making the process more convenient and accessible.
The new rule, if implemented, would have a broad impact across various industries, including digital streaming and e-commerce services, cable TV subscriptions, news outlets, and gym memberships. FTC Chair Lina Khan emphasized the importance of the proposal, stating, Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place. The new rule would not only save consumers time and money but also subject businesses engaging in deceptive enrollment tactics to significant penalties.
The FTC’s efforts to address these issues began in 2021 when the agency warned companies against using misleading ads, making it difficult for consumers to cancel subscriptions, or burying key terms and fees. Rising consumer complaints about deceptive enrollment tactics prompted the FTC to take action. The agency has since taken legal action against Amazon.com, Inc. for allegedly enrolling consumers into its Prime program without their consent and impeding the cancellation process. Additionally, numerous businesses have faced lawsuits from the FTC for hindering customers who wish to cancel their services.
The proposed changes aim to strengthen consumer rights and curb deceptive subscription practices. By making canceling subscriptions easier and more accessible, consumers will be better protected from being trapped in unwanted or unauthorized recurring charges. The coalition of attorneys general, including California AG Rob Bonta, is working towards safeguarding consumer interests and ensuring transparency and fairness in the subscription industry.
