It will compel businesses to make both signing up and canceling subscriptions as simple as possible.
Before converting free trials into paid memberships or renewing subscriptions, businesses—including gyms and retailers—will also need to obtain customers’ consent.
The new regulation is scheduled to take effect in about six months.
According to FTC chair Lina Khan, “too often, businesses make people jump through endless hoops just to cancel a subscription.”
“The FTC’s rule will put an end to these scams, saving Americans money and time.” No one ought ever be forced to pay for a service they no longer desire.
Businesses will not be allowed to require customers to use a chatbot or an agent to cancel subscriptions that they initially signed up for through an app or website under the new rule.
Businesses must provide customers with the option to cancel memberships they signed up for in person by contacting or registering online.
On a related matter, the FTC filed a lawsuit against Amazon, a major player in the technology industry, last year.
According to the lawsuit, the company deceived consumers into purchasing Prime subscriptions that automatically renewed and made cancellation challenging.
