FTC’s New Rule Lets You Quickly Cancel Subscriptions in 2025!
Published On: October 17, 2024
The Federal Trade Commission (FTC) has finalized a new "click-to-cancel" rule aimed at making it easier for consumers to cancel subscriptions and memberships. Announced on October 16, 2024, the rule responds to widespread consumer complaints about the difficulty of canceling recurring services, requiring businesses to provide straightforward cancellation options. Companies that do not comply may face civil penalties.
The "click-to-cancel" rule will require businesses to offer cancellation processes that are just as easy as signing up for a service. For example, if a subscription is started with a single click online, a similar one-click option must be available to cancel it. Additionally, companies must clearly disclose all key terms before obtaining a consumer's billing information and cannot mislead consumers about recurring charges. This will prevent companies from trapping consumers in services they no longer wish to use.
Consumer complaints about hard-to-cancel subscriptions have skyrocketed in recent years. In 2024 alone, the FTC received almost 70 complaints per day, compared to 42 daily complaints in 2021. This rise has coincided with the growing subscription economy, where services like streaming platforms, fitness memberships, and meal delivery kits have become popular but sometimes hard to escape.
According to a 2022 study by CR Research, 42% of consumers had forgotten they were paying for services they no longer used, and many underestimated their monthly subscription costs by over $100. The FTC’s new rule aims to address these challenges by giving consumers more control over their subscriptions and reducing unwanted charges.
The rule applies to a wide range of industries, including tech companies, gyms, and fintech startups. Companies like Amazon and Adobe have faced criticism for making subscription cancellations difficult. Amazon, in particular, has been accused of enrolling customers into their Prime service without their full consent. Additionally, gyms like Planet Fitness have been criticized for requiring members to cancel in person despite sign-ups being available online.
How will this benefit you?
For consumers, the "click-to-cancel" rule promises significant improvements. Cancellation methods will be simplified, preventing consumers from being stuck in services they no longer use or want. Whether a consumer signs up online, in person, or through an app, they will have a clear and easy way to cancel. While the US Chamber of Commerce has expressed concerns that the rule may increase costs for consumers, supporters argue that it will empower individuals to manage their finances better and avoid unwanted charges.