New 'click-to-cancel' rule will make it easier to end unwanted subscriptions

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FILE - Webpage of video streaming subscription service YouTube Premium. A new FTC rule will make it easier for consumers to end unwanted subscriptions. (Photo Illustration by Timon Schneider/SOPA Images/LightRocket via Getty Images)

A new "click-to-cancel" rule adopted by the Federal Trade Commission Wednesday will prohibit businesses from misleading people about subscriptions and require them to get customers’ consent before auto-renewing payments and charging for free trial offers.

"Too often, businesses make people jump through endless hoops just to cancel a subscription," FTC Chair Lina Khan said in a statement. "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."

The proposal received more than 16,000 comments before the FTC adopted it in a 3-2 vote Wednesday. Proponents say it’ll make it easier for consumers to cancel unwanted subscriptions and memberships. Big business groups opposed to the new rule, like the U.S. Chamber of Commerce, say the "heavy-handed regulations" will lead to higher costs for consumers.

What is the ‘click-to-cancel’ rule?

In addition to requiring customer consent before auto-renewing payments and charging after free trials, the new "click-to-cancel" rule means businesses must also disclose when free trials or other promotional offers will end and let customers end recurring subscriptions as easily as they started them.

According to the FTC, the agency receives thousands of complaints about recurring subscription practices each year. In 2021, the FTC received an average of 42 subscription complaints a day. This year, that number is up to 70 consumer complaints each day.

Most of the provisions of the new rule will take effect 180 days after the rule is published in the Federal Register, the agency said.

‘Click-to-cancel’ part of larger initiative

The Biden administration included the FTC's proposal as part of its "Time is Money" initiative, a government-wide plan that was announced in August with the aim of cracking down on consumer-related hassles. The initiative featured new regulations and the promise of more for industries spanning health care and fitness memberships to media subscriptions.

Vice President Kamala Harris, the Democratic nominee for president, highlighted the "click-to-cancel" rule last month as a policy she would pursue if elected.

The Biden administration has also targeted hidden and bogus junk fees, which can mask the total cost of concert tickets, hotel rooms and utility bills.