The FTC has taken significant steps to address deceptive practices in subscription services. On October 16, 2024, the agency issued a broad “Click-to-Cancel" rule introducing new requirements for companies offering subscription services, auto-renewals, free-to-pay conversions, and other services that automatically enroll consumers in recurring payments unless they actively cancel (collectively referred to as “negative options”).
Here’s what you need to know:
???????????? ????????????????????????:?Businesses must provide a straightforward method for consumers to cancel their subscription, ensuring that the cancellation process is as easy as the sign-up. The cancellation method must be accessible through the same medium as the sign-up and cannot, for example, require interaction with a representative if such interaction was not required for the sign-up.
?????????? ??????????????: Businesses must obtain “unambiguously affirmative consent” to the negative option before charging consumers and must keep a record of such consent for at least 3 years. Companies can bypass the recordkeeping requirement if they can prove their system makes it impossible to complete a transaction without securing consent.
????????????????????: Businesses must clearly and conspicuously disclose all material terms to consumers before collecting billing information. This includes details about charges, deadlines for cancellation, frequency of charges, and how to access the cancellation mechanism.
?????????????????????????????????? ??????: Businesses are prohibited from misrepresenting any material facts about their offers, including details about the negative option feature, costs, consumer consent, cancellation terms, the purpose or effectiveness of the product or service, health or safety claims, or any other important information.
?????????????????? ??????????: The Rule applies to all negative option programs in any media, including digital channels, telemarketing, in-person sales, and traditional print.
?????????????????? ????????: The ban on misrepresentations will take effect 60 days after the rule is published in the Federal Register, and the provisions regarding disclosure, consent, and cancellation will become effective 180 days after publication. The rule is expected to be published in the Federal Register in the upcoming weeks.
The #FTC approved the Click-to-Cancel Rule by a 3-2 vote. Three industry associations have already filed suit claiming the Rule violates the Administrative Procedure Act and exceeds the FTC’s authority.
Though the Rule is subject to an existing challenge, for privacy professionals, the message is clear: Businesses should?place greater emphasis on transparency and move away from dark patterns that manipulate user behavior.
At VeraSafe, we’re ready to help you navigate these regulatory changes. Reach out to learn how the new rule impacts your business and what steps to take for #compliance.
#ClickToCancel #ProductManagement
