FTC Vows End to Free Trial and Subscription Scams

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?