US “click to cancel” rule to address subscription traps

The US Federal Trade Commission (FTC) has adopted the “click to cancel” rule, which aims to make it easier for people to terminate subscriptions.

It will force companies to make sign-up and cancellation processes equally clear.

Businesses, including retailers and gyms, will also have to get customer approval before renewing subscriptions or converting free trials into paid memberships.

The new rule is scheduled to take effect in about six months.

“Too often, companies make people jump through endless hoops just to opt out,” said FTC Chairwoman Lina Khan.

“The FTC’s ruling will end these scams and traps, saving Americans time and money. No one should have to pay for a service they no longer want.”

Under the new rule, companies will be prohibited from forcing customers to use a chatbot or agent to cancel subscriptions that were originally registered to use an app or website.

For memberships that customers signed up for in person, businesses will have to offer the option to terminate them by contacting them by phone or online.

last year, The Federal Trade Commission (FTC) has taken legal action against tech giant Amazon over a related issue.

The lawsuit accused the company of tricking customers into signing up for Prime subscriptions that automatically renew and making it difficult for people to cancel.

She also said that Amazon’s website designs prompted customers to agree to sign up for Prime and automatically renew the subscription as they made a purchase.

Amazon has rejected these claims.

The Federal Trade Commission has also taken action Taking legal action against software giant Adobe For similar reasons.

She sued the company for allegedly violating consumer protection laws with “hidden” termination fees and a complicated cancellation process.

The FTC said Adobe failed to clearly disclose its terms to customers, including the one-year subscription length and fees that would be charged for early cancellation.

Adobe has disputed these claims.

The law introduced in the UK in May also targets so-called subscription traps.

The Digital Markets, Competition and Consumer Act 2024 requires businesses to provide clear information to consumers before entering into a subscription agreement.

It forces vendors to remind customers that their free or low-cost trial is coming to an end.

It also requires companies to ensure that customers can terminate the contract easily.