To combat unnecessarily complicated cancelation policies, the Federal Trade Commission (FTC) is considering changes to existing rules which would simplify companies’ cancelation processes. The FTC contends that such changes are needed to combat unfair and deceptive business practices. If adopted, the rule change would go beyond the problems it intends to solve and harm consumers by restricting a company’s ability to offer discounts and other services.

In March of 2023, the FTC proposed changes to the Negative Option Rule that would require companies provide customers with an option to cancel their subscription using the same steps that they used to subscribe. Or they could simply “click to cancel.” Additionally, customers would need to be asked if they want to hear about other offers before they can be told what they are.

The stated goal of the rule change is to stop companies from charging customers for subscriptions they no longer want, as well as to combat business tactics where firms attempt to prevent customers from canceling their subscriptions.

Some subscriptions are unnecessarily difficult to cancel. One of the most notorious offenders is gym memberships. Canceling with gyms varies by contract but it can be difficult and sometimes it is even dependent on extenuating circumstances, such as moving or medical reasons. If you are eligible to cancel at all it often requires going in person to fill out a form or sending it in via mail.

Rules that exist just to make the process more complicated for the consumer deserve more scrutiny. However, as written, the rule may actually do more than make cancelations easier.

Among those opposed to the rule change are former FTC Commissioner Christine Wilson, who in her dissenting opinion, argued that the proposed rule would unnecessarily lump pro-consumer behavior with deceptive business conduct. Industry groups have also weighed in on the rule change, with many complaining that the new rule would make it more difficult for them to offer better deals to customers.

Read the full Economic Standard article here.

Trey Price is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.