US: FTC delays rule to make canceling subscriptions easier
What's the story
The Federal Trade Commission (FTC) has opted to postpone the enforcement of its Negative Option Rule, popularly known as the "click-to-cancel" rule. First proposed in 2023, the regulation seeks to make the cancellation of subscriptions as easy as signing up for them. The rule specifically targets companies that sell both physical and digital subscriptions, such as streaming services and gym memberships, through easy sign-ups, only for customers to later discover that canceling requires a far more complicated and time-consuming process.
New deadline
FTC's latest decision extends postponement of enforcement
Initially, the FTC had planned to enforce some provisions of this rule from January 19. However, due to unforeseen complexities, the enforcement was postponed until May 14. The latest decision has now extended this delay by an additional 60 days, pushing the new deadline to July 14. The Commission stated that it has reassessed and found that "the original deferral period insufficiently accounted for the complexity of compliance."
Business requirements
Rule mandates businesses to offer cancellation through same method
The Negative Option Rule prevents businesses from compelling customers to cancel subscriptions through a different means than that used for signing up. For instance, if a customer subscribes through the company's website, they should also be able to cancel their subscription on that same platform. Further, companies are also mandated to provide relevant information about cancellation before collecting payment details from customers.
Future amendments
FTC remains open to amending the rule if needed
Despite the delay in enforcement, the FTC has reiterated its commitment to enforce the rule by July 14. The Commission also said that it is open to amending this rule if any issues are found during enforcement. This statement highlights the agency's willingness to adapt and modify regulations based on practical challenges faced during their implementation.