The FTC just approved a game-changing “click-to-cancel” rule that simplifies how consumers cancel subscriptions in the U.S. This regulation aims to protect consumers from deceptive practices and ensure cancellations are as easy as signing up.
Music streaming giants like Spotify, Apple Music, and Amazon Music, which serve hundreds of millions of subscribers globally, are among the companies most impacted. These platforms will now need to streamline their cancellation processes to match the simplicity of their sign-up systems.
The FTC receives thousands of complaints annually about shady subscription practices, and this rule aims to reduce that number. Backed by the Biden administration’s ‘Time is Money’ campaign, it addresses long-standing consumer frustrations. However, some business groups express concerns that the rule might drive up costs for consumers.
Here’s what’s in the rule:
1. Canceling Should Be Easy
If a company, like Spotify or Amazon Music, lets you subscribe online, they must allow you to cancel through the same method with the same number of steps. No more navigating complex menus or searching for hidden options to end your subscription.
2. No More Deception
Companies can no longer mislead consumers with hidden terms. The rule makes it illegal for sellers to lie or misrepresent any material facts about their subscriptions.
3. Informed Consent
The FTC’s rule also requires businesses to get your informed consent before charging you for any recurring subscription. This puts more control back into your hands, ensuring you’re not hit with unexpected fees.
4. Clear Disclosure
Businesses must provide clear, truthful, and easy-to-find information about their subscriptions. If a subscription has conditions or automatic renewals, they need to disclose that upfront.
5. Multiple Cancellation Options
If you subscribed in person, you should be able to cancel online or over the phone with no added hassle.
This rule will go into full effect by April 2025. It applies to most subscription-based programs, regardless of the media in which they were sold. Companies that violate this rule could face civil penalties and be held liable for refunds.
Two things were dropped from the final version of this rule. Companies won’t have to send you annual reminders about your subscriptions, and they can still offer you alternatives or ask if you want to hear their pitch before canceling — but only after getting your consent first. This new rule is a big win for consumers. It gives us more control over our subscriptions and stops companies from trapping us in hard-to-cancel services. Let’s hope it sets the stage for even stronger consumer protections in the future.