The US Federal Trade Commission (FTC) has approved a “click-to-cancel” rule that is expected to change how companies handle subscription cancellations.
The regulation, taking effect 180 days after Federal Register publication, will require companies to simplify their cancellation processes to match the ease of signing up, the FTC announced Wednesday (October 16).
The change will be significant for music streaming giants like Spotify, Apple Music, and Amazon Music, which collectively serve hundreds of millions of subscribers in the US and globally. These platforms will need to ensure that the process for cancelling a subscription is at least as simple as the process for signing up.
The rule aims to address what the FTC describes as “deceptive practices” in subscription services, where consumers often face complicated cancellation procedures despite simple enrollment processes.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC Chair Lina M. Khan. “The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
The new rule also prohibits companies from misrepresenting material facts while using “negative option marketing”, failing to clearly disclose terms before collecting billing information, and charging consumers without getting their informed consent.
“Too often, businesses make people jump through endless hoops just to cancel a subscription. The FTC’s rule will end these tricks and traps, saving Americans time and money.”
Lina M. Khan, Federal Trade Commission
The Commission said its decision follows extensive public consultation, with over 16,000 comments received from the public, including consumers, government agencies, and industry groups. The final rule represents an update to the FTC’s 1973 Negative Option Rule, adapting regulations for today’s digital economy, the FTC said.
Recent data shows subscription-related complaints have risen significantly, with the FTC receiving nearly 70 consumer complaints daily in 2024, up from 42 per day in 2021. This increase partly prompted the regulatory update, the FTC said.
The FTC first proposed the new ‘click-to-cancel’ rule in March 2023. Notable changes to the initially proposed rule include removing requirements for annual subscription reminders and lifting restrictions on providers offering alternative plans during cancellation attempts. The Commission approved the final rule with a 3-2 vote.
Companies found violating the new regulations may face penalties and enforcement actions.
The new rule mirrors a similar development in South Korea, where the FTC’s counterpart is targeting the subscription practices of streaming giants, including Spotify. Back in August, the Korean Fair Trade Commission was reported to have sent examination reports to five major OTT and music streaming platforms, alleging that they have not provided users with the ability to terminate their subscriptions mid-billing cycle, or have failed to inform consumers of their refund rights.
These companies include Netflix‘s Korean affiliate and Spotify Korea, as well as local video streaming platforms Wavve and Watcha Inc., and music streaming platform NHN Bugs Corp.
Music Business Worldwide