FTC Announces Proposed “Click to Cancel” Rule

On March 23, 2023, the Federal Trade Commission (“FTC”) announced that it was proposing a new rule which would, among other things, make it easier for consumers to cancel certain subscriptions involving recurring payments.  According to FTC Chair Lina M. Khan, “[t]he 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.”  Indeed, the FTC press release stated that the FTC receives thousands of consumer complaints about such practices on an annual basis.

The proposed rule would implement the following changes:

•    A cancellation mechanism that would enable consumers to make it as easy to cancel a subscription as it was to begin it;

•    Allowing sellers to pitch new offers or changes when a consumer tries to cancel, but only after asking consumers whether they want to hear them; and

•    Requiring sellers to send an annual reminder to consumers who are enrolled in negative option programs involving anything other than physical goods before automatically renewing their subscriptions.

The proposed rule will be open for public comment after it is published in the Federal Register.

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