New FTC Rules Make It Easier To Cancel Services, Punish Companies For Being Annoying Little Shits About It

Policy

from the annoyance-isn't-a-business-model dept

While FTC boss Lina Khan certainly has had some growing pains, she’s fought for consumer protection and antitrust reform in a way that U.S. regulators haven’t seen for the better part of a generation.

Whether it’s taking on automaker privacy abuses, supporting right to repair reforms, or taking aim at Amazon’s attempt to dominate the entirety of online retail, she’s notably different from the feckless revolving door careerists that usually stock regulatory agencies, which is why the Barry Dillers, Reid Hoffmans, and Mark Cubans of the world are so hot and bothered.

Enter the FTC’s latest effort: cracking down on the predatory and annoying ways companies try to prevent you from cancelling services. Cemented by AOL in its heyday, and perfected by everybody from the Wall Street Journal to your broadband and wireless phone provider, corporate America loves to make it as annoying as possible to simply cancel services, often actively hiding any way to do so.

The FTC says its new revamp of the FTC’s 1973 “Negative Option Rule” requires companies be completely transparent about the limitations of deals and promotions, prohibits them from making cancelling services difficult or impossible, requires consumer actively consent to having read terms and deal restrictions, and generally makes cancelling a service as easy as signing up.

“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” Khan said. “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”

Most of the FTC’s new guidelines will go into effect in 180 days, with some in effect within 60 days after publication in the Federal Register. The rulemaking updates started way back in 2019. There’s a fact sheet here that explains the proposal in more detail.

Consumer groups like US PIRG were pleased.

“For years, too many companies have used questionable tactics to trap customers in recurring payments even if they no longer want or need their services,” US PIRG Consumer Watchdog Director Teresa Murray said of the rule changes. “Subscriptions and memberships have often been like a visit to the Hotel California: ‘You can check out any time you like, but you can never leave.’ Now, you’ll be able to leave.”

Trade groups representing everything from media companies and telecoms to car wash operations called the rules “burdensome and unnecessary.” Publishers and Advertisers like the News/Media Alliance also complained about the rules, insisting they would “confuse customers” (one alliance group member, the WSJ, worked for years to make subscription cancellation as annoying as humanly possible, and didn’t seem too upset about consumer confusion at the time).

I’d suspect that, as in most sectors, these organizations will likely file suit to scuttle the new rules, insisting that several recent decisions by a corrupt Supreme Court have effectively made U.S. consumer protection effectively illegal without the specific, uncharacteristically-competent approval of a Congress too corrupt to function. They’re having more success on this front than you might think.

Again, there’s a lot of grumbling about Khan, but most of it oddly omits the numerous and popular consumer protection reforms she continues to implement cracking down on obvious consumer pain points the government previously spent decades doing nothing about.

Filed Under: barry diller, cancellations, consumer protection, consumers, ftc, lina khan, subscriptions