Subscriptions are nothing new in the business world, but they can be tough to track and, more importantly, cancel. Now, a new ruling from the Federal Trade Commission makes it easier than ever to cancel a subscription. Today, we want to discuss how this impacts you, your business, and your users.
The Concept of “Click to Cancel”
The FTC has revised its Negative Option Rule to become the Rule Concerning Recurring Subscriptions and Other Negative Option Programs.
What the heck does that mean? As explained in the official Final Rule submission: “Negative option programs come in a variety of forms, but all share a central feature: each contain a term or condition that allows a seller to interpret a customer’s silence, or failure to take an affirmative action, as acceptance of an offer.”
Basically, the omission of a “no” can be interpreted as a “yes,” which we all know is not necessarily true in practice.
This ruling breaks down the different categories of negative option programs: prenotification, continuity, automatic renewals, and free trials. The rule previously only covered prenotification plans. While these examples are considered legitimate negative option marketing concepts, the commission goes on to detail how these practices harm consumers, be they individuals or businesses.
It Will Be Easier to Cancel Subscriptions
With these rule adjustments, businesses need to make it easier for subscribers to opt out of their services or cancel a subscription.
For example, if a person signed up online or in person, they can cancel their subscription either online or in person. If a discussion with a live agent or chatbot wasn’t involved during the sign-up process, then the same won’t be needed during the cancellation process. If a user cancels over the phone, it cannot include fees, and showing up must strictly be optional (available, but not mandatory).
Charges should also have records regarding informed consent, which must be retained for at least three years. Businesses must disclose terms and conditions and the cancellation process every time the negative option pops up.
Is Your Business In the Know?
And then there’s the looming fear of penalties for noncompliance.
For this rule, the FTC could charge your business $51,744 per customer, per violation. Before April 2025, ensure you’re aware of how to comply with these new FTC rules. Bevlin can help you with these regulations and more, of course, so you’re not going into the situation blind!
To learn more about how we can help your business comply with technology and industry regulations, call us today at 781-679-0172.
