How Many Clicks Does it Take to Get a Subscription Cancellation?

By: Timothy Fitzpatrick

We today live in a world dominated by the internet. In turn, dominating the internet is a litany of major problems. One of these major problems is that which drains wallets via automatic renewals of memberships and subscriptions, and which often entices consumers via free trials. It is known as the negative option subscription, and it has been taken on once again by the FTC.

In October, the Federal Trade Commission, or FTC, announced that it has finalized a rule further regulating negative option subscriptions.[1] These types of subscriptions include those free-trial and automatic renewal subscriptions that have come to control how we access things on the internet, from streaming services to Amazon Prime memberships to New York Times subscriptions. They are defined by their continuity for as long as the consumer does not cancel them, and more often than not by how many roadblocks there are to that cancellation.[2] The new FTC rule will change that by requiring that they be as easy to cancel as they are to enter.[3]

Billed as a “click-to-cancel” rule, is a response to a steady increase of complaints to the FTC regarding negative option subscriptions.[4] Since the pandemic, the number of daily complaints on average has nearly doubled as our world has become more reliant on internet-based services and, by extension, more subjected to online subscriptions.[5] While the FTC has had negative option rules since 1973, which at the time concerned prenotification and continuity plans for book clubs and newspaper deliveries, new problems have since arisen.

The new rule, set to go into effect January 14th, 2025, and requiring compliance by May 14th, does much more than just require negative option plans to be as easy to cancel as they are to enter.[6] It also requires that notice is provided up front when a consumer enters an automatically renewing subscription as well as express consent from the consumer to enter.[7] Furthermore, the rule will crack down on the misrepresentation of subscriptions in advertising to ensure that consumers know what they’re getting into.[8] Violators of the rule will have to provide redress and may even face civil penalties.[9]

In passing the finalized rule, the Commission was split three to two with Commissioner Melissa Holyoak providing a dissenting opinion.[10] In the dissent, Holyoak stated that the new rule was far too broad and unlikely to survive a legal challenge.[11] Holyoak also stated that the allegedly rushed-out rule was a political maneuver for the Commission Chair’s “favored presidential candidate,” Kamala Harris, who just weeks later would lose the election.[12]

Despite the strong dissenting opinion, the change will likely be one that is welcomed by the public without regard to political stance; there were 16,000 comments on the notice of proposed rulemaking, many of which had been written by consumers celebrating the proposal.[13] With the rule’s entry onto the Federal Register, it is all but certain that we will soon need far fewer clicks to cancel our subscriptions.

Sources:

  1. Mitchell J. Katz, Federal Trade Commission Announces Final “Click-to-Cancel” Rule Making it Easier for Consumers to End Recurring Subscriptions and Memberships, FTC (Oct 16, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/10/federal-trade-commission-announces-final-click-cancel-rule-making-it-easier-consumers-end-recurring
  2. FTC Focuses on Subscription Offerings and Negative Options, Reed Smith (July 18, 2023), https://www.reedsmith.com/en/perspectives/2023/07/ftc-focuses-on-subscription-offerings-and-negative-options 
  3. Katz, supra note 1.
  4. Negative Option Rule, 89 Fed. Reg. 90537 (Nov. 15, 2024) (to be codified at 16 C.F.R. pt. 425).
  5. Katz, supra note 1.
  6. Negative Option Rule, 89 Fed. Reg. 90537 (Nov. 15, 2024) (to be codified at 16 C.F.R. pt 425).
  7. Id.
  8. Id.
  9. Id.
  10. Dave Michaels and Joseph Pisani, Ending Subscriptions Will Get Easier With New “Click-to-Cancel” Rule, Wall St. J. (Oct. 16, 2024, 6:43 PM), https://www.wsj.com/politics/policy/canceling-subscriptions-is-torture-the-government-wants-to-make-it-easier-for-you-7ad7a247
  11. Melissa Holyoak, Dissenting Statement, FTC (Oct. 16, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/holyoak-dissenting-statement-re-negative-option-rule.pdf 
  12. Id.

13. Katz, supra note 1.