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Some gyms make people cancel their memberships by certified mail. It can take an hour on the phone to try and drop a cable provider. Federal regulators get numerous complaints like these every day and have finalized a rule to try to make it easier for consumers to get out of these commitments. NPR's Alina Selyukh gets into the fine print.
ALINA SELYUKH, BYLINE: The basics of the rule are straightforward. Canceling subscriptions or memberships must be as easy as signing up, and companies have to be fully transparent about the terms of any free trial or discounted subscription before asking for payment.
SAM LEVINE: We've tried different approaches in the past. Companies are just not getting the message.
SELYUKH: Sam Levine runs the Consumer Protection Bureau at the Federal Trade Commission, which passed the rule. He spoke to NPR's Planet Money podcast.
LEVINE: They know exactly what they're doing. They're using some of the most sophisticated design techniques available to trap people in these subscriptions and manipulate them.
SELYUKH: The FTC says it receives around 70 complaints about this every day. A woman from Arizona wrote it took her 20 minutes to join a gym and more than three days to cancel that membership. A senior citizen said they had to call three times to cancel one magazine subscription. Someone once described an essential oils company demanding a portion of a social security number to cancel. TikTok is rife with these stories.
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UNIDENTIFIED PERSON #1: You basically have to remove your kidney just to cancel the friggin' subscription.
UNIDENTIFIED PERSON #2: Are you sure you want to cancel? How about 15% off? How about 30% off? How about no? I hit the cancel button. This is crazy.
SELYUKH: In recent years, the FTC has taken a few companies to court, including Amazon and Adobe, accused of tricking people into paid memberships that were purposefully difficult to cancel. The new rule now says online subscriptions should require the same amount of clicks to cancel as they do to enroll, and in-person signups must have an option to cancel online or over the phone. Levine also says the rule begins to shift the financial incentive by giving federal regulators more power to fine violators.
LEVINE: Companies that engage in subscription traps will be liable for civil penalties of more than $50,000 per violation. And every time you trap a consumer in a subscription is a potential violation.
SELYUKH: Numerous business groups and the FTC's Republican commissioners have opposed the new rule. They've argued that the agency overstepped its legal authority to pass new burdensome requirements. The U.S. Chamber of Commerce called it a regulatory power grab to micromanage business decisions. Most of the rules requirements will go into effect in about six months, and it's likely to eventually get tested in court.
Alina Selyukh, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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