Unveiling the 'Click to Cancel' Revolution: Eradicating Subscription Traps

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FTC Adopts 'Click to Cancel' Rule for Easier Subscription Management

The US Federal Trade Commission (FTC) has implemented a click to cancel rule to simplify subscription cancellations for consumers. Businesses, including retailers and gyms, must now obtain customer consent before renewing subscriptions or converting free trials into paid memberships.

Straightforward Sign-Ups and Cancellations

The rule mandates that companies make subscription sign-ups and cancellations equally straightforward. For in-person memberships, businesses must provide options for termination via phone or online.

Addressing Subscription Traps

The FTC cited examples of companies using deceptive practices to trap customers in subscriptions. Amazon's website design allegedly pushed customers into Prime enrollment with automatic renewal during purchases.

FTC Lawsuits and Allegations

The FTC sued Adobe for allegedly violating consumer protection laws with hidden termination fees and a complex cancellation process. The lawsuit accused the company of misleading customers into signing up for automatically renewing Prime subscriptions and making cancellations difficult.

UK Law Targets Subscription Traps

In May, the UK introduced a law to combat subscription traps. The Digital Markets, Competition and Consumers Act 2024 requires businesses to provide clear information to consumers before they enter subscription agreements.

Effective Date and Industry Response

The FTC's click to cancel rule will take effect in approximately six months. Adobe has disputed the allegations against it. The new UK law aims to address similar concerns in the UK market.