Government cracking down on companies that make it hard to cancel subscriptions

Data Privacy Crackdown
Lina Khan, then-nominee for Commissioner of the Federal Trade Commission (FTC), speaks during a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill in Washington, April 21, 2021. (Graeme Jennings/Washington Examiner via AP, Pool, File)

Government cracking down on companies that make it hard to cancel subscriptions

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The Federal Trade Commission is seeking to crack down on companies that make canceling subscriptions difficult after a slew of complaints.

The agency is seeking to establish a simple, click-to-cancel option for subscriptions, the Wall Street Journal reported, rather than the complicated, and as the FTC argued, predatory, ways that some companies use to attempt to confuse consumers to continue buying subscriptions.

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“Companies should not be able to manipulate consumers into paying for subscriptions that they don’t want,” FTC Chairwoman Lina Khan said, the Verge reported. “We get countless complaints about this.”

The proposal is part of a package of changes to its Negative Option Rule, introduced in 1973, which monitors the practice of charging customers for a good or service when they fail or forget to cancel an agreement. The agency said it had received 16,020 complaints under the rule in 2021 and 17,427 complaints in 2022.

Companies have increasingly turned to subscriptions as a way to boost revenue. Revenue from subscriptions grew 300% between 2012 and 2018. The COVID-19 pandemic caused another boom in subscription popularity, which companies have continued to ride, even as other consumer patterns have reverted to pre-pandemic levels.

Surveys by the consulting firm West Monroe revealed that Americans have so many subscriptions, many of which can be confusing to track and navigate, that nearly all lose track. Of those surveyed, 100% admitted that they didn’t know the total cost of all their subscriptions. When asked to guess, the average was 3.4 times less than they truly paid.

A 2016 survey from Hiatus found that 70% of respondents continued paying for unwanted subscriptions because they forgot to cancel before the automatic renewal point. It is this topic specifically that the FTC is looking to tackle.

A number of well-known companies either use, or until recently used, call-to-cancel or similar Kafkaesque processes that make canceling subscriptions frustratingly difficult.

To cancel a Comcast subscription, a customer must submit a form that will lead to a service representative calling them to confirm. In some cases, the representative will talk for several minutes, offering deals, in an attempt to prevent them from leaving. A 2014 case, reported by Gizmodo, saw a frustrated customer have to deal with a service agent talking for nearly 20 minutes, asking leading questions such as, “So you’re not interested in the fastest internet in the country?”

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News media are another major violator. A 2021 study from the American Press Institute found that just 41% of news organizations offer a “click to unsubscribe” option, with most making customers go through complicated processes to cancel. Similar to Comcast, 60% of news organizations surveyed used “customer service reps [who] are trained in tactics for ‘saving’ renewals when customers ask to cancel.”

Despite the increasing backlash, subscription-based companies have only intensified efforts to make cancellation more difficult. A September report from the FTC said that “sophisticated dark patterns,” including call-to-cancel models, are becoming increasingly common.

© 2023 Washington Examiner

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