FTC Proposes Ban on Difficult-to-Cancel Gym and Cable Subscriptions
April 1, 2023
We are all familiar with memberships and subscriptions that are easy to register but difficult to cancel. I mean your unused gym membership, cable TV, magazine subscriptions, and even things like Amazon Prime.
Rules to regulate and respect users
The FTC is trying to find novel ways to prevent frustrating situations and avoid hidden charges. This week, the US Federal Business Commission issued a notice to raise a ban on these kinds of accounts and memberships. That’s because it gets thousands of complaints a year about the case.
They call it “click to unsubscribe” whose goal is to make these subscriptions as simple to unsubscribe as it has been to sign up early. For example, you can immediately sign up for a gym membership online, over the phone, or even with an app. But most of these require 30-day notice and an in-person visit if you want to cancel. Or, if you subscribe to something online with a single click, you shouldn’t have to call a phone number and jump through several other hoops to cancel.
Problems, subscriptions and cancellations
Another similar initiative is to attack hidden taxes and fees when you sign up. As previously explained, this is a common drawback with cable companies like Spectrum and Comcast. By the way, these proposals have a few other positions, each aimed at defending consumers from being locked into a subscription, paying hidden fees, or even being tricked into paying for another month.
One provision will call for annual reminders, which will help users stay informed about what they keep paying for. Even more relevant, organizations have to warn consumers about a program in which, by not canceling, it automatically renews, so that you continue paying. Ultimately, customers don’t have to struggle with hidden taxes and fees or go through a ton of hoops to unsubscribe that only took 30 seconds or one click to sign up.
“Organizations don’t have the ability to manipulate customers into paying for subscriptions they don’t want. We have received countless complaints about this.”
said FTC Chair Lina Khan, a reporter before the announcement.
The FTC offers to put in place requirements they could do to stop more types of misconduct. He also recommends instructing the companies to clearly explain to the population what they are buying, making sure that the population knows what they are assuming and that the repeal is as simple as the subscription. However, a formal ban institutes a codified standard for what is illegal and gives the FTC more flexibility to seek reinstatement from companies that violate the rule.
Laws and regulations to be changed
The agency can recover close to $50,000 per personal violation of a consumer’s rights, and client requests have the potential to recover damages for lost funds and potentially lost time. And formal standards are becoming increasingly important as more and more organizations push constant-service-on-property models. Khan claimed:
“We’ve seen in the last few years, especially, a shift that organizations continue to make more and more towards subscription models. That move to larger subscriptions has created more opportunities for mischief.”
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