United States: The U.S. Federal Trade Commission (FTC) has adopted a new ‘click to cancel’ rule, set to take effect in about six months. This regulation strives to make subscription sign-ups and cancellations equally easy, convincing businesses to streamline cancellation procedures.
Retailers, gyms, and other subscription-based services will also be instructed to obtain customer approval before renewing memberships or converting free trials into paid subscriptions.
FTC Chair Lina Khan underlined that the rule is planned to prevent companies from creating barriers that make it difficult for clients to withdraw services. Khan stated that, “Too often, businesses make people jump through endless hoops just to cancel a subscription. The FTC’s rule will end these tricks and traps, holding Americans time and money.”
Under the rule, businesses are restricted from forcing customers to cancel through chatbots or agents if the initial sign-up was done via an app or website. For in-person sign-ups, companies must offer cancellation options through phone or online platforms.
The new rule observes a series of legal actions by the FTC against major companies like Amazon and Adobe. In 2023, the FTC sued Amazon, accusing the tech giant of misleading customers into signing up for Prime memberships that automatically renewed and made cancellations difficult. Amazon has rejected the allegations.
Similarly, Adobe met an FTC lawsuit over claims that its cancellation processes were overly complicated, with hidden fees and insufficient disclosure of contract terms. Adobe has also contested these charges.
This move aligns with international efforts to combat subscription traps. The UK’s Digital Markets, Competition and Consumers Act, introduced in May 2024, directs companies to provide clear information on subscriptions and offer easy cancellation options.
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