The Federal Trade Commission (FTC) has proposed a new rule that would make it easier for consumers to cancel free subscriptions. The so-called "click to cancel" provision requires sellers to make it as easy for users to cancel subscriptions as it was to subscribe.
“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” said FTC Chair Lina M. Khan, in a press release. “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”
Specifically, it would require a simple cancellation mechanism and force companies to provide annual reminders to members before renewing their subscription and ask consumers for consent before pitching them additional offers when they try to cancel.
The rule would fall under the 1973 Negative Option Rule, which the FTC has been increasingly referencing to establish new rules for unfair aspects of the digital economy such as subscriptions, memberships, and recurring-payment programs.
The agency explained that these types of programs become a problem when marketers "fail to make adequate disclosures, bill consumers without their consent, or make cancellation either difficult or impossible—such as by requiring customers to cancel in person or keeping them stuck on hold waiting to talk to customer service."
The FTC said it receives thousands of consumer complaints each year about these practices.
Universal Music Group and AI platform Udio have settled a copyright lawsuit and will collaborate on a new music creation and streaming platform. The companies announced on Wednesday that they reached a compensatory legal settlement and new licensing agreements. These agreements aim to provide more revenue opportunities for Universal's artists and songwriters. The rise of AI song generation tools like Udio has disrupted the music streaming industry, leading to accusations from record labels. This deal marks the first since Universal and others sued Udio and Suno last year. Financial terms of the settlement weren't disclosed.
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