FTC Proposes Easier Online Subscription Cancellation Rules
08 July, 2023
The Federal Trade Commission (FTC) is stepping up its efforts to make online subscription cancellation more straightforward for consumers. The move comes in the wake of a surge in online subscriptions, which, although easy to sign up for, often prove challenging to cancel. This is a significant development for consumers who are increasingly finding it difficult to keep track of their numerous online subscriptions, and for businesses in various industries, including gym marketing, who rely heavily on subscription models.
The FTC’s proposed regulations aim to ensure companies make it as simple to cancel a subscription as it is to start one. For instance, if a customer can sign up for a service online, they should be able to cancel the subscription through the same online platform and in the same number of steps. The new regulations, which are currently being finalized, are expected to come into effect by spring or summer next year.
This initiative has sparked a lot of interest, with many individuals and groups submitting online comments about the proposed rules. Some consumers have shared their frustrating experiences trying to cancel subscriptions for services like TextNow and MyHeritage. In some cases, consumers had to resort to drastic measures, such as persuading their credit unions to stop monthly withdrawals from their accounts.
The FTC’s proposal targets “negative option” plans, which assume that customers accept an offer unless they actively decline it. These plans often include free trials that automatically transition into paid subscriptions. While these plans can offer substantial benefits to consumers, the FTC has noted an increase in the use of “dark patterns” that make it challenging for customers to cancel their subscriptions. These tactics include requiring customers to navigate through multiple screens or making the online “cancel” button less noticeable than the “continue” button.
A survey conducted by C+R Research in May 2022 revealed that consumers initially estimated they spent an average of $86 per month on subscription services. However, after scrutinizing their expenses more closely, they found they were actually spending $219. This discrepancy underscores the importance of consumers being vigilant about their subscriptions and the need for more transparent cancellation processes.
Businesses that rely on subscription models, such as those involved in gym lead generation or advertising for gyms, should pay close attention to these proposed changes. The new rules could impact how they retain customers and how they structure their subscription models.
The FTC’s proposal also includes provisions for companies to offer alternative, money-saving options before a customer cancels a service. However, the main goal of these changes is to prevent situations where customers are coerced into maintaining subscriptions they no longer want or need.
In light of these developments, consumers are advised to be proactive in managing their subscriptions. Regularly reviewing checking and credit card statements can help identify recurring charges and forgotten subscriptions. If a service is no longer needed or used, it should be cancelled – although that’s often easier said than done.
The FTC’s initiative is a welcome move towards greater transparency and consumer protection in the digital marketplace. It serves as a reminder for businesses to prioritize customer satisfaction and convenience in their marketing strategies. For those in the gym marketing industry seeking more gym members through Facebook ads or other platforms, this could mean reevaluating their subscription models and cancellation procedures to ensure they align with these new regulations.