FTC Vows End to Free Trial and Subscription Scams

John Lister's picture

American consumers and businesses should soon find it much easier to cancel subscriptions, "free trials" and other ongoing payments. The FTC has added what it's dubbed the "Click to Cancel" rule that means it must be as easy to cancel such arrangements as it is to start them.

The regulation is formally known as the "Rule Concerning Recurring Subscriptions and Other Negative Option Programs." In this case "negative" means the provider will start or continue to take payments unless the user expressly cancels the arrangement.

Free Trials Have Surprise Catch

The FTC has been working on the changes for five years after exploring complaints from customers who felt misled. In some cases they were unaware that they would be charged automatically, for example with a free trial automatically converting to a paid subscription.

In other cases, they found it extremely difficult to cancel an arrangement, often finding it involved a lengthy phone call or even sending registered mail to a specific hard-to-find address.

The updates to the rule mean providers will now have to be truthful and not misleading when setting up such arrangements, including making it clear when payments will start and how customers can cancel. This must be "clear, conspicuous and available to your customers before they enroll." Key details will also have to be shown at the precise moment the user signs up, including when they are clicking a button or submitting a form online.

No Chatbots Required

Businesses will also need to get explicit proof that the user consented to the arrangement and keep this proof for three years. This could be a signature or a clearly marked checkbox that says the customer has read and understood the agreement.

Finally, customers must be able to cancel in the same way they signed up. For example, if a customer signed up online by clicking a button or submitting a form, they must be able to cancel the same way without having to "talk" to a customer service agent or chatbot. (Source: bbc.co.uk)

Customers can't be forced to cancel by phone unless they signed up that way. A business that offers phone cancellation can't charge extra for doing so (or use a premium rate number) and must take phone calls during normal business hours. (Source: ftc.gov)

What's Your Opinion?

What do you think about the FTC's new rule? Have you ever struggled to cancel a subscription or free trial? How do you think this new rule will impact businesses and consumers?

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Comments

LouisianaJoe's picture

Several years ago I accepted a "30 day free trial". It required a credit card. What I did not see was that I was signing up for a 1 year subscription that I could not cancel with auto renewal at the end of the year. When I determined what was going on, I logged in and blanked out the credit card. I was able to talk to someone, but they would not let me cancel it and the card was already charged. I then unsubscribed to the newsletter that tricked me.

ronangel1's picture

A few months ago I signed up for a service with a similar name to the one I intended to sign up for. It was £1-99p the first month after I had paid (via PayPal, as I normally do for anti-money scam reasons and not having to cancel credit cards) This was a good price for service but as soon as I sent the first payment it said there would be for the second month and so on until cancelled £11-99p first thing I did when I found I had been misled cancelled the PayPal payments got message from PayPal about agreements but still cancelled. I did not download any software or extra software for account or use. I emailed the company stating I had been misled and to refund my £1-99p (never got it back!) Was told to cancel would have to register with a password and log in. Then it started would put a used car salesman to shame. Got offered loads of discounts but I still said cancel as I had been misled about the company name and don't want the product as have now got the correct one.
for two months got offers and discounts and asked them to remove my email but had to block it as spam after 3 months as they were in the USA and I am in the UK and gave up!
We need this Law! Always good to use PayPal when paying for things you are not sure about as the seller does not have your address details just email. In this case, a very small amount of money would have been too much trouble to get PayPal to refund.

repete_14444's picture

HOORAY! When does it take effect? Most e-newspapers and magazines pull that trick. One customer service jerk actually berated me for taking advantage of the 3 months for $1 several times. Now I'm getting that e-newspaper free indefinitely! HA!

nate04pa's picture

I hope this works. I wonder how it will apply to businesses outside the US.