WASHINGTON, D.C. — The Federal Trade Commission (FTC) has amended the Negative Option Rule, also known as the “Click to Cancel” rule. This amendment is designed to simplify the process for consumers looking to cancel subscriptions and recurring charges, a move that has been strongly advocated by Pennsylvania Attorney General Michelle Henry.
Negative option marketing, often used by companies to enroll consumers into subscriptions without clear consent, has been a longstanding challenge for consumers nationwide. The newly unveiled rule mandates a straightforward cancellation process, making it as easy for consumers to opt out of subscriptions as it was to sign up.
Attorney General Henry praised the FTC’s action, stating, “I am pleased to see that our federal partners followed many of our recommendations, which will protect consumers in the Commonwealth and across the country.” She emphasized the necessity for cancellation processes to be as straightforward as the initial sign-up, addressing the deceptive practices that have burdened consumers with unnecessary steps to cancel subscriptions.
The revised rule, set to take full effect 180 days post-publication in the Federal Register, introduces several key requirements:
- Transparent and easy-to-find information must be provided to consumers.
- Consumers must be fully informed about the terms before agreeing to a subscription.
- Sellers are required to document that consumers understood and agreed to the terms.
- Cancellation processes should match the ease of signing up; for instance, online sign-ups must allow for online cancellations.
- Sellers in violation may face civil penalties and be required to provide consumer redress.
FTC Chair Lina M. Khan remarked on the importance of the rule, stating, “Too often, businesses make people jump through endless hoops just to cancel a subscription. The FTC’s rule will end these tricks and traps, saving Americans time and money.”
This rule applies to a broad range of negative option programs across various media platforms, aiming to curb misrepresentation and ensure consumers give informed consent before being charged. The amendment comes as part of the FTC’s broader initiative to update the 1973 Negative Option Rule, aligning it with the complexities of today’s digital economy.
The modification follows extensive public feedback, with over 16,000 comments received from various stakeholders, including consumer groups and trade associations. Notably, the final rule drops previous proposals requiring sellers to provide annual reminders about subscription terms and prohibits discussing plan modifications during cancellation requests unless consumers express interest.
The FTC has been receiving increasing complaints regarding negative option practices, with nearly 70 complaints per day reported in 2024 alone. The new rule seeks to establish a consistent legal framework to protect consumers from misleading practices while maintaining a balance that allows businesses to continue offering subscription models.
Through these amendments, the FTC aims to foster a more equitable marketplace where consumers can easily manage their subscriptions without undue burden, thus reinforcing their rights and promoting fair business practices.
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