Van Hollen, Colleagues Highlight Need for FTC to Approve “Click to Cancel” Rule to Crackdown on Predatory Subscription Practices
U.S. Senators Chris VanHollen (D-Md.), Richard Blumenthal (D-Conn.), Jack Reed (D-R.I.), Peter Welch (D-Vt.), and Ron Wyden (D-Ore) wrote to the U.S. Federal Trade Commission in support of its proposed “click to cancel” rule to make it easier for consumers to get out of unwanted subscriptions, memberships, and other recurring-payment programs. The proposed rulemaking aims to ensure companies give consumers the ability to cancel services simply and easily and clear information when purchasing goods and services. More information on the rule can be viewed here.
The Senators begin, “Every year, our constituents submit thousands of complaints to the Commission about negative option transactions, in which sellers interpret their failure to take affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services. While negative option billing can be legitimate and beneficial with proper disclosure and consent, many consumers fall victim to deceptive tactics and suffer financial harm when marketers fail to be transparent or make cancellation difficult or impossible.”
The Senators underscore their support, writing, “The proposed rule would help address these problems. Updating and strengthening existing regulations will safeguard consumers from deceptive practices and allow the Commission to adapt to market changes. Providing key information on trial periods, subsequent charges, and cancellation processes will enable customers to make informed decisions. The proposed rule focuses on clear disclosures in negative option marketing, ensuring consumers are fully informed about trial offers to prevent unintentional enrollment in recurring payments. The rule emphasizes the importance of transparency and fairness by requiring businesses to obtain explicit consent before charging consumers. It recognizes that accessible cancellation mechanisms like ‘click to cancel’ are essential to protect consumer rights and foster trust in the marketplace. And critically, prohibiting businesses from sharing billing information without consent safeguards personal and financial privacy and prevents unauthorized charges.”
The Senators also note in closing that the proposed “click to cancel” rule complements theConsumer OPT-IN Act, legislation introduced in March by Senator Van Hollen and cosponsored by Senators Blumenthal, Wyden, Luján, Reed, and Welch to require companies to communicate clearly about their subscription-based services and obtain explicit consent before charging for automatic renewals.
Full text of the letter is available here and below.
Dear Chair Khan:
We write to support the Federal Trade Commission’s effort to revise its Negative Option Rule, as outlined in the Notice of Proposed Rulemaking published on April 24, 2023. We commend the Commission’s efforts through individual enforcement actions and policy statements to address illegal practices sometimes used by unscrupulous sellers in automatic renewal subscriptions, continuity plans, free-to-pay conversions, and pre-notification plans. Nevertheless, problems persist. Industry, consumers, and regulators need a consistent legal framework to address negative option marketing across media and offers.
Every year, our constituents submit thousands of complaints to the Commission about negative option transactions, in which sellers interpret their failure to take affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services. While negative option billing can be legitimate and beneficial with proper disclosure and consent, many consumers fall victim to deceptive tactics and suffer financial harm when marketers fail to be transparent or make cancellation difficult or impossible.
The proposed rule would help address these problems. Updating and strengthening existing regulations will safeguard consumers from deceptive practices and allow the Commission to adapt to market changes. Providing key information on trial periods, subsequent charges, and cancellation processes will enable customers to make informed decisions. The proposed rule focuses on clear disclosures in negative option marketing, ensuring consumers are fully informed about trial offers to prevent unintentional enrollment in recurring payments. The rule emphasizes the importance of transparency and fairness by requiring businesses to obtain explicit consent before charging consumers. It recognizes that accessible cancellation mechanisms like “click to cancel” are essential to protect consumer rights and foster trust in the marketplace. And critically, prohibiting businesses from sharing billing information without consent safeguards personal and financial privacy and prevents unauthorized charges.
The Consumer Online Payment Transparency and Integrity Act (Consumer OPT-IN Act) that we co-sponsor in Congress aligns closely with these objectives. We believe that our collective efforts can effectively address the challenges associated with negative option marketing.
Thank you for your determined enforcement efforts and continued attention to consumer welfare and a fair and transparent marketplace.
Sincerely,
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