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Mahesh

18/10/24 11:43 AM IST

New ‘click-to-cancel’ rule in US

In News
  • The United States’ Federal Trade Commission (FTC) will soon implement a “click-to-cancel” rule, which will make it significantly easier for consumers to cancel their subscriptions and memberships, and make companies liable to face civil penalties for complicating the cancellation process.
About new rule
  • According to the FTC press release, sellers will be required to “make it as easy for consumers to cancel their enrollment as it was to sign up”.
  • Notably, cancellations will have to be offered through the same medium (online, phone, etc.) people used to sign up, and it shouldn’t be overly burdensome.
  • Companies cannot require people to talk to a live or virtual representative to cancel if they did not have to do that to sign up;
  • Companies cannot charge extra for phone cancellation, and must answer the phone or take a message during normal business hours. If they take a message, companies have to respond promptly;
  • For memberships/subscriptions that were originally offered in person, companies cannot mandate an in-person subscription, and have to offer options for cancellation online or on the phone;
  • It will apply to “almost all negative option programs in any media” including “prenotification and continuity plans, automatic renewals, and free trial offers, whether the offer appears online, on the phone, or in person.”
  • The FTC defines “negative option” programmes as “companies assuming a customer accepted a service unless they specifically rejected it”.
  • This would include something like a consumer agreeing to a one-week trial, and not cancelling it before being billed for regular membership.
The final rule will provide a legal framework preventing sellers from:
  • Misrepresenting any material fact made while marketing goods or services with a negative option feature;
  • Failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature;
  • Failing to obtain a consumer’s express informed consent to the negative option feature before charging the consumer; and
  • Failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.
Source- Indian Express

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