Click-to-cancel rule blocked by court, but consumers still have options
Federal appeals court halts cancellation rule; advocates urge vigilance with subscriptions
(CNN)- A federal court has blocked the Federal Trade Commission’s “click-to-cancel” rule, halting a measure that would have made it easier for consumers to cancel memberships and subscriptions.
The policy was set to take effect earlier this month, but a U.S. appeals court stopped its implementation, saying the FTC failed to conduct a required cost-benefit analysis.
Rule would have applied to streaming, gyms, free trials
The now-paused rule, backed by the Biden administration, aimed to require businesses to make canceling a subscription as simple as signing up. It would have applied to a broad range of services, including gym memberships, streaming platforms, and free trial offers.
Consumer advocates like Erin Witte, Director of Consumer Protection for the Consumer Federation of America, say the policy was meant to prevent manipulative cancellation processes.
“Companies shouldn’t be able to engineer a website to trap you in a doom loop simply so that they can keep taking money out of your account every single month when you don’t want them to anymore,” Witte said.
Critics called rule burdensome for business
Business groups, including the U.S. Chamber of Commerce, opposed the rule, arguing it would micromanage how companies operate.
The court did not rule on the substance of the policy, but instead rejected it on procedural grounds related to the FTC’s rulemaking process.
“They dismissed the rule based on a technicality,” Witte said. “We were certainly disappointed to see that result, but the good news is that it’s not the end of the story.”
What consumers can do now
While lawmakers explore ways to revive the rule through legislation, Witte advises consumers to take proactive steps.
Those include setting calendar reminders to avoid unwanted charges from free trials, and checking cancellation policies before signing up for a service.
“Try to look before you sign up at what the cancellation process really looks like,” Witte said.
Consumers experiencing difficulty canceling subscriptions are encouraged to report issues to the FTC so the agency can track patterns of abuse.
