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The Federal Trade Commission (FTC) is proposing a new rule that would prevent consumers from having to jump through hoops to end their subscriptions.
"The idea here is pretty simple. Companies shouldn't be able to manipulate consumers into paying for subscriptions they don't want," FTC chair Lina Khan told reporters Wednesday, according to a report from CBS News.
The proposed rule comes as consumers have continued to voice complaints that canceling subscriptions such as gym memberships and magazine subscriptions is often too cumbersome, with some companies forcing costumers to call a live salesperson who then attempts to convince them to renew.
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Streaming services have seen a growth of subscribers. (iStock / iStock)
The new FTC rule, dubbed "Click to Cancel," would be designed to make it easier to cancel unwanted subscriptions, requiring businesses to make it just as easy to cancel a membership as it initially was to sign up.
"Too often, companies make it difficult to unsubscribe from a service, wasting Americans’ time and money on things they may not want or need. I support FTC's proposal requiring companies to fix this. It shouldn’t be harder to cancel a service than it was to subscribe for it."
Subscription services have continued to grow in recent years, with the pandemic driving sales to offerings such as streaming services and fitness brands like Peloton. However, the process to cancel many of those subscriptions has become one of the top complaints filed with the FTC in recent years.
"This unfortunately is a semi-universal experience for consumers," Khan said.
Traditional newspapers still rely on subscribers. (AP Photo/Mark Lennihan, File / AP Newsroom)
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The proposed rule has garnered the support of President Biden, who took to social media Thursday to throw his support behind the idea.
"Too often, companies make it difficult to unsubscribe from a service, wasting Americans’ time and money on things they may not want or need," Biden said on Twitter. "I support FTC's proposal requiring companies to fix this. It shouldn’t be harder to cancel a service than it was to subscribe for it."
Companies that violate the proposed rule could be on the hook for fines of $50,000 per violation, which Khan said "can quickly add up if you think about the number of consumers."
The rule would also include a way for consumers to get their money back when subscriptions they did not want and could not cancel were renewed.
Peloton offers customers a subscription service. (Peloton)
The proposed rule will still have to clear an open comment period and other hurdles before going into effect, but Khan expressed optimism that it will eventually become a reality.
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"We are just doing our job, to protect consumers from unfair practices," she said. "We think we are firm legal ground."