Canceling a subscription should be easy, Democratic lawmakers insisted Wednesday, introducing a bill to revive the Federal Trade Commission's so-called "Click-to-Cancel" rule.
The FTC hoped to enforce the rule due to "increasing reports of consumers losing time and money from intentionally difficult subscription cancellation processes," lawmakers said. But cable companies sued to block the FTC rule last year, arguing that the FTC failed to conduct an economic impact study before making it easier to cancel over a billion paid subscriptions in the US.
Earlier this month, a federal appeals court nullified the rule, agreeing with an administrative law judge that the FTC skipped a regulatory analysis required to pass the rule since compliance costs would exceed $100 million. That study would have included cost-benefit analyses of alternatives to the rule, in addition to gauging the rule's effectiveness in comparison to those alternatives.
Had the court not intervened, the click-to-cancel rule would have taken effect this month, and Democratic Congressmembers Brad Sherman (D-Calif.), Seth Magaziner (D-R.I.), and Chris Deluzio (D-Penn.) suggested it was a shame that American consumers are still stuck jumping through hoops to cancel online subscriptions due to the FTC's "procedural technicalities."
"Subscriptions are Corporate America’s new favorite way to try and rip people off, and it’s driving people crazy that they can’t easily cancel," Deluzio said in a press release. "Canceling subscriptions should not be full of tricks and traps that waste hard-earned time and money—canceling should be just as easy as signing up."
Picking up where the FTC left off, lawmakers announced the Click to Cancel Act, which requires companies to "provide a simple, direct mechanism to cancel a subscription and immediately stop charges." It also requires companies to obtain clear and direct consent before signing customers up for auto-renewals.
John Breyault, vice president of public policy, telecommunications, and fraud for the National Consumers League, suggested that the "simple, commonsense policy" is "long overdue" and passing it "could be the easiest vote for Members of Congress to cast this year."
Senator Ruben Gallego (D-Ariz.) introduced a companion bill in the Senate, which could help the bill advance quickly through both chambers of Congress. But it's unclear if the measure will have bipartisan support, as both Republican FTC commissioners notably voted against the rule and only Democrats have so far attached themselves to the bill. Democrats will likely point to popular support for the rule to get Republicans onboard, with Breyault claiming it could be the "most popular" action Congress could take this year.
"Too many companies are relying on shady fine print and confusing cancellation processes to lock customers into charges they never agreed to," Gallego said. "They’re counting on customers to forget, give up, or get stuck in the fine print so they can keep charging their card every month."
If the law is passed, violations would be considered "unfair or deceptive acts or practices" under the FTC Act. Any company found to be frustrating the cancellation process could face significant fines—perhaps more than $50,000 per violation.
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