Consumers must be able to cancel subscriptions as easily as they sign up for them, the Federal Trade Commission proposes in a rule likely to have a wide-ranging impact including on fitness and media companies.
The FTC’s proposal would require companies that allow online sign-ups to also offer online cancellations options in just a few steps, rather than forcing customers to quit in person or over the phone. Companies would also have to send reminders before automatic renewals are billed.
“Companies should not be able to manipulate consumers into paying for subscriptions they don’t want,” FTC Chair
“Too often, companies make it difficult to unsubscribe from a service, wasting Americans’ time and money on things they may not want or need,” he said in a Twitter post. “It shouldn’t be harder to cancel a service than it was to subscribe for it.”
While newspaper and magazine subscriptions have existed for decades, today consumers can sign up for recurring subscriptions for everything from razors and makeup to digital tokens for use in online or mobile games. Companies like
Netflix, Peloton and Spotify make it relatively easy to cancel subscriptions already, on their websites or through their apps. Others make it harder. Cable-television companies, for example, usually require consumers to phone in to cancel, while
UBS Wealth Management estimated that subscriptions will expand into a $1.5 trillion market by 2025, up from $650 billion in 2020.
The average American spent $273 a month on subscription services in 2021, according to consulting firm West Monroe, up from $237 in 2018. Yet another 2021 survey by Chase found 56% of consumers said they have trouble tracking recurring subscriptions and it takes about three months for them to cancel unneeded ones.
In recent years, Apple,
The proposed rule is the latest from the FTC, an antitrust and consumer protection agency that has taken on a more aggressive approach under Khan. Last year, the FTC proposed a rule to
(Updates to add Biden comments in fourth paragraph.)
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