The Federal Trade Commission (FTC) has approved a new "Click to Cancel" rule making subscription cancellations significantly easier for U.S. consumers. The rule requires businesses to make cancellation processes as straightforward as signing up for their services.

Key Changes Under the New Rule:

• Businesses must provide simple, easy-to-find cancellation mechanisms
• Cancellation must be possible without mandatory customer service calls
• Companies must clearly display purchase information and terms upfront
• Sellers cannot prevent consumers from avoiding or stopping recurring charges
• The rule applies to all subscription services, including music streaming platforms

Implementation Timeline: The rule will take effect 180 days after its Federal Register publication. Businesses failing to comply may face penalties under the FTC Act.

Important Exceptions and Notes:

• Some businesses may qualify for exemptions
• The rule passed with a 3-2 commission vote
• Commissioner Holyoak opposed the rule as "overbroad" and potentially unlawful
• Commissioner Slaughter supported but noted the absence of annual subscription reminders

Impact on Music Services: While most music streaming services already offer straightforward cancellation processes, the rule particularly affects satellite radio services like SiriusXM, which faces ongoing litigation regarding subscription cancellations and fees.

The regulation modernizes the FTC's 1973 negative option rule, addressing current digital subscription models and providing stronger consumer protections for modern service offerings.

Related Articles

Previous Articles