The Federal Trade Commission (FTC) has been in the process of reviewing its 1973 Negative Option Rule, which aims to protect consumers from negative option billing practices by making it easier for them to cancel recurring memberships and subscriptions.In its final amendment to the rule, the FTC will require sellers to eliminate any hurdles preventing customers from canceling a subscription or membership they no longer want.According to the FTC, this will save consumers time and money.
What is ‘negative option billing’? Negative option billing is a type of billing system that sellers use to automatically charge customers unless they explicitly opt out or cancel their service.Negative option billing is common with subscription-based services, free trials and mail order merchandising.“Too often, businesses make people jump through endless hoops just to cancel a subscription.
The FTC’s rule will end these tricks and traps, saving Americans time and money.Nobody should be stuck paying for a service they no longer want.” —FTC Commission Chair Lina M.Khan The new and final amendment to the click-to-cancel rule will prohibit sellers from: Misrepresenting any material fact made while marketing goods or services with a negative option feature Failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature Failing to obtain a consumer’s express informed consent to the negative option feature before charging the consumer Failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.
Source: FTC What does this mean for internet customers? According to the FTC, this new rule applies to “almost all negative option programs in any media,” including internet subscriptions.This means internet providers will have to make it as easy for you to cancel your service as it was to sign up for the service, hence the “click-to-cancel” moniker.They also won’t be able to automatically renew any subscriptions without your explicit consent.
Internet and TV providers are already opposing this rule, as seen by a recent lawsuit against the FTC by the NCTA — The Internet & Television Association.The NCTA represents cable and internet companies such as Comcast (Xfinity), Cox and Charter (Spectrum), as well as media giants like Disney.The lawsuit argues that the FTC is overstepping its authority with the inception of this new rule.
It also claims it would infringe on telecom industry practices and impose unnecessary costs on businesses since negative option billing covers millions of dollars in subscriptions for the telecom companies.Unless blocked, the FTC’s new click-to-cancel rule will take effect on March 31, 2025 — 180 days after its publication in the Federal Register.Written by: Camryn Smith Cammy is a writer with Allconnect, growing her broadband industry knowledge for over a year on the internet marketplace.
Her expertise lies in home internet and broadband service with a focus on providers, plans…
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