A new rule established by the United States Federal Trade Commission (FTC) aims to stop companies from misleading consumers into signing up for services, and make it easier for consumers to cancel services they're not interested in anymore.
The new rule deals with "negative option marketing," which is essentially any time a company interprets a customer not explicitly declining a good or service as them wanting to pay for it. Essentially, if a customer doesn't explicitly decline something ahead of being billed, they're assumed to still want that thing and both receive it or pay for it. This manifests frequently nowadays as subscription services like Netflix, Hulu, and Disney+, where a customer pays for a month of the service and then is assumed to still want that service month after month.
While this type of marketing isn't prohibited, the FTC has historically regulated it, and with this new "Click to Cancel" rule, it's increasing its oversight. At the heart of the rule a requirement that sellers make it as easy to cancel a service as it is to sign-up for it. For example, if signing up for something just requires one click, then canceling it should also require a click. Signing up in person means you can cancel in person, or over the phone.
Additionally, the final rule requires sellers to provide transparent information to consumers about what exactly they're signing up for before they sign up. Sellers are prohibited from misrepresenting material facts, and are required to provide certain pieces of information and get informed consent before collecting customer billing info.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC chair Lina M. Khan. “The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
You can read more about the specifics of the rule, which officially takes effect in 180 days, at the FTC's website. This rule is yet another example of the FTC under the Biden administration increasingly scrutinizing the tech world, from attempting to break up big mergers to a recent rule prohibiting fake and AI-generated product reviews.
Rebekah Valentine is a senior reporter for IGN. Got a story tip? Send it to rvalentine@ign.com.
