The United States is making some big changes to protect people from tricky subscription services. The Federal Trade Commission (FTC) has just announced a new rule called the ‘Click to Cancel’ rule. The goal? To make it super simple for people to cancel subscriptions they don’t want anymore. This is good news for everyone who has ever struggled to stop paying for a service they don’t use!

What’s Changing?

The new rule says companies must make canceling a subscription as easy as signing up for it. For example, if you joined a gym or signed up for a streaming service online, you should be able to cancel it just as quickly online. No more long phone calls, dealing with chatbots, or talking to agents who try to convince you to stay. It’s all about giving control back to the customers.

This change applies to all kinds of businesses—gyms, online shopping subscriptions, and even software companies. They can’t keep customers trapped in confusing processes or hide the steps needed to cancel. If you signed up online, you cancel online. If you signed up in person, you can cancel either over the phone or through a website.

The rule is expected to take effect in about six months, giving companies time to adjust to the new guidelines.

Making Life Easier for Customers

FTC Chair Lina Khan had a lot to say about this new rule. “Too often, businesses make people jump through endless hoops just to cancel a subscription,” she explained. “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.”

Many people have experienced the frustration of trying to cancel a subscription, only to find that it’s nearly impossible. You might have to go through several screens, call customer service, or chat with a representative before you can finally stop paying for something. With this new rule, the process will be quick and easy, putting an end to these sneaky practices.

What About Automatic Renewals?

Another important part of this rule is how it handles automatic renewals. Some companies automatically renew subscriptions without clearly telling their customers, especially after free trials. This can lead to surprise charges when people don’t realize they’re still signed up. Under the new rule, businesses must get permission from customers before renewing a subscription or turning a free trial into a paid membership.

This change is a big deal for consumers who have been caught off guard by automatic payments. Companies will now have to be more upfront, giving you the choice to say yes or no before your account gets charged again.

Companies in Trouble

The FTC didn’t just come up with this rule out of nowhere. They’ve already taken action against big companies that have been accused of making it hard for people to cancel their subscriptions. Last year, they went after Amazon, one of the world’s largest companies, for allegedly tricking customers into signing up for its Prime service. The FTC said Amazon’s website was designed to push people into agreeing to a subscription, and once they were signed up, canceling it was much harder than it needed to be.

Amazon denied the claims, saying they did nothing wrong. But the case brought attention to how companies can use their websites to make it difficult for people to stop services they don’t want.

Adobe, a huge software company, also got into hot water with the FTC. The commission sued Adobe for not clearly explaining its subscription terms and making it tricky for customers to cancel. The lawsuit claimed Adobe had hidden fees for early cancellations and didn’t properly tell people how long they were signing up for. Just like Amazon, Adobe denied these claims.

These examples show that the FTC is serious about cracking down on companies that take advantage of customers. The new rule will make it harder for businesses to pull these kinds of tricks in the future.

Similar Laws Around the World

It’s not just the US that’s getting tough on subscription traps. The UK introduced a similar law earlier this year. Their Digital Markets, Competition, and Consumers Act 2024 is designed to make sure customers know exactly what they’re signing up for. It forces companies to give clear information before someone starts a subscription, so there are no surprises later on.

The UK law also makes businesses send reminders when a free or low-cost trial is about to end, and it requires them to make canceling easy. The idea is to stop companies from taking advantage of customers who might forget about a subscription they don’t want anymore.

Why Does This Matter?

So, why is this such a big deal? Well, almost everyone has signed up for a subscription at some point. Whether it’s for a streaming service, a gym membership, or a software program, subscriptions are everywhere. While they’re often convenient, they can also be a hassle when you want to stop using them.

Many companies count on the fact that people will forget to cancel or will give up trying to figure out how to cancel. That’s how they keep making money, even from customers who don’t use their services anymore. The ‘Click to Cancel’ rule is about giving people more control over their money and making sure businesses can’t take advantage of them.

What’s Next?

For now, businesses have about six months to get ready for the new rule. After that, they’ll need to make canceling subscriptions much easier for everyone. If companies don’t follow the rules, they could face fines or other penalties from the FTC.

In the meantime, consumers should keep an eye out for any changes in how companies handle subscriptions. The days of tricky cancellation processes may soon be over, thanks to this new rule.