Still trying to quit that gym membership? The FTC is proposing a rule that could help
Updated March 23, 2023 at 10:26 AM ET
For many, canceling a subscription or membership — even one acquired online — has become synonymous with unending hold music and persistent sales pitches.
The Federal Trade Commission says it receives thousands of complaints every year from consumers plagued by recurring charges that they either weren't able to cancel or didn't know they were signing up for in the first place.
Now it's taking new steps to try to change that. On Thursday, the FTC proposed a new rule that would make it easier for people to cancel those pesky charges — and get their money back.
"It would really say that companies are not able to manipulate consumers into paying for subscriptions that they don't want," FTC Chair Lina Khan told Morning Edition's Leila Fadel on Thursday.
Among other changes, the "Click to Cancel" provision would require sellers to make it just as easy for customers to leave subscriptions — to everything from cosmetics to gym memberships to newspapers — as it is to enroll.
It also aims to give consumers a clearer idea of what exactly they're signing up for in advance, so they don't feel "tricked or trapped into subscriptions," as Khan put it.
"The FTC has for years now been bringing lawsuits against these practices, but unfortunately the practice has persisted and that's what's leading us to now move forward with this rule," she adds.
The commission just completed the first step of the process, when it voted 3-1 to publish a notice of proposed rulemaking in the Federal Register.
Now members of the public can weigh in on the proposal by submitting comments electronically. The FTC says it will take that feedback into account before finalizing any rule.
It would make it easier to ditch unwanted recurring fees ...
The idea behind the new rule is simple, Khan says: For any product or service, it should be as easy to cancel as it is to sign up.
"So if you were able to subscribe online you need to be able to cancel online using the same number of steps," she explains. "If you open an account over the phone, you need to be able to close it over the phone without suffering through endless hold music or sales pitch."
That's not always the case now. Many gyms require members to cancel in person or via certified or notarized mail. Cell phone or cable providers might allow you to sign up online, but only let you cancel by talking to a customer service representative who will try to persuade you otherwise.
"These companies are betting that customers will be too impatient, busy, or confused to jump through every hoop," wrote the three FTC commissioners in favor of the rule change (commissioner Christine Wilson dissented, calling it too broad).
The new rule would also help the FTC get money back from consumers who have been harmed by these tactics in the past, and strengthen enforcement by introducing civil penalties for companies that violate the rule.
They would face a fine of $50,000 per violation per day.
"When you're talking about companies that have hundreds or thousands or millions of consumers," Khan says, "that could add up quite quickly."
... And help consumers avoid potential traps in the first place
Khan says it's not just that consumers are getting stuck in certain subscriptions. Sometimes, she says, they're "tricked" into signing up for them to begin with.
That's why the new rule would require businesses to clearly disclose key terms — like when the trial period ends, the cancellation deadline, the frequency of charges and date of payments — before collecting billing information from the customer.
It would prohibit companies from engaging in what the FTC calls "dark patterns," or manipulative design techniques, that make it hard for customers to effectively make the decision they want on a company's website or app.
"Some consumers report thinking they've successfully canceled, only to find out later that they didn't notice a nearly invisible button that they needed to click in order to finalize their decision," the three commissioners said in their statement.
The rule would also require sellers to provide consumers with an annual reminder before their subscriptions are automatically renewed.
Businesses can still offer perks or discounts to customers to convince them to stay. But they would need explicit permission from the customer before making the offer.
"So if a customer service representative says, 'I understand you're looking to cancel, would you like the opportunity to get a better deal?' the consumer would get to say, 'Yes actually, I'd like to see that' or 'No, I just want to cancel,'" Khan says.
Ally Schweitzer edited the audio version of this story and Majd Al-Waheidi edited it for digital. contributed to this story
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