US ‘click to cancel’ rule to ban subscription traps

The US Federal Trade Commission (FTC) has adopted a ‘click to cancel’ rule, which aims to make it easier for people to end subscriptions.

It will force companies to make subscription sign-ups and cancellations equally straightforward.

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

The new rule is due to come into effect in around six months’ time.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC chair Lina Khan.

“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.”

Under the new rule, businesses will be banned from forcing customers to go though a chatbot or an agent to cancel subscriptions that were originally signed up to using an app or website

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

Last year, the FTC took legal action against technology giant Amazon on a related issue.

The lawsuit accused the firm of tricking customers into signing up for Prime subscriptions that renewed automatically and made it difficult for people to cancel.

It also said Amazon’s website designs pushed customers into agreeing to enrol in Prime and have the subscription automatically renewed as they were making purchases.

Amazon has rejected the claims.

The FTC has also taken legal action against software giant Adobe for similar reasons.

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

The FTC said Adobe had failed to clearly disclose its terms to customers, including the year-long length of a subscription and charges that would be triggered for cancelling early.

Adobe has disputed the allegations.

A law introduced in the UK in May also takes aim at so-called subscriptions traps.

The Digital Markets, Competition and Consumers Act 2024 requires businesses to provide clear information to consumers before they enter a subscription agreement.

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

It also requires companies to ensure customers can easily end a contract.