Tech Firms Like To Make Cancelling Subscriptions Infuriatingly Hard But Regulators Are Starting To Crack Down

(MENAFN- The Conversation) Imagine your favourite author has a new book coming out, and your local bookshop is offering to deliver it to you for free on publication day. All you have to do in return is sign up to their new“reading club”.

This involves a monthly fee, for which you receive a new book, chosen by them, every week. You can cancel at any time by visiting the store.

It seems like a great deal – until you keep forgetting to cancel. books arrive that you don't read, money keeps being paid out of your account. And when you finally find time to go to the shop, they say they need the cancellation in writing.

They also have a long form for you to fill out explaining exactly why you want to cancel. Oh, and the person who deals with cancellations is on a day off. And would you like free membership for two weeks while you think about it? And so the membership, and the payments, continue ...

Such a scenario might seem ridiculous – but it only sounds absurd because it is set in the physical world. The online equivalent is common, with the cancellation of many online subscriptions demanding great effort – significantly more than joining in the first place.

But things may be about to change.“Dark patterns” – the online systems designed to keep you subscribed to a service or app – are coming under increasing levels of scrutiny .

On October 16 2024, the US Federal Trade Commission (FTC) introduced a new regulation , known as the“click to cancel” rule, which will make it much easier for people to end their online subscriptions.

Under the new rule, online businesses based in the US will have to make it as easy for consumers around the world to end a particular service as it was to join in the first place. So if a subscription began via a particular app or website, then it should be possible to cancel it in the same place. Cancellation processes should be easy to find, and simple to navigate.

It may sound like an obvious system which shouldn't require legislation. But our research shows that everyday services – social media platforms, streaming services and even financial trading apps – are often far harder to leave than they are to join.

Some social media sites for example, take users a few minutes to join, but as many as 40 minutes to leave.

But the“click to cancel” rule isn't free of controversy. The FTC's decision wasn't unanimous, with members split along political lines . And there is already an expectation of legal challenges.

Companies that may benefit from people finding it difficult to cancel subscriptions are suing to prevent the FTC from enforcing its new rule .

So the future of click-to-cancel is already in doubt, and the results of the US presidential election may effect the rule's survival.

In the UK, businesses are currently obliged to provide consumers with plenty of information about subscriptions – but they are not obliged to give customers a right to opt out of auto-renewal. Nor are they obliged to attain permission to start charging when a free trial expires.

Instead, they must provide reminder notices of pending auto-renewal and offer an easy exit route when charging begins.

Financial services – such as banks, insurance policies or pension providers – are treated slightly differently in that firms must ensure that customers understand what they are signing up for, and steer those customers towards “good outcomes” . For instance, if there is a better rate available, financial services firms should let their customers know and make it easy for them to get it.

Read more: Dark patterns: how online companies strive to keep your money and data when you try to leave

Making it easy to leave is important, with the UK government estimating that subscription traps cost UK consumers £1.6 billion a year in unwanted services.

But perhaps regulators could go further with sector specific rules which make signing up to certain things a bit more demanding. For instance, it may be desirable for online gambling to be far harder to join than to leave .

Consumer protection is entering a new era. Regulators have finally recognised that the online space gives platforms and business the potential to influence customer decisions like never before, and they are beginning to act. But while new rules are drawn up, remember to be careful what you click for.

MENAFN12112024000199003603ID1108876840