The FTC seeks to make it easier to cancel subscriptions
The FTC seeks to make it easier to cancel subscriptions
The Federal Trade Commission wants to make it easier to cancel subscriptions.
The proposed regulation would prohibit companies from trying to retain customers through deceptive or burdensome tactics to delay cancellations for digital and physical subscriptions.
Raghuram Iyengar, a marketing professor at Wharton, feels a bit oversubscribed.
“In terms of streaming I have Netflix, I have Hulu, I have Disney+,” he said. “I do have Sling as well because I do watch a lot of cricket.”
Iyengar said subscriptions have exploded in the last few years beyond gyms and newspapers.
These days, you can get a subscription for pretty much anything. Wine, razor blades, meal kits and more. UBS expects the industry to be worth $1.5 trillion by 2025 — more than double what it was a few years ago.
“With the rise of direct to consumer, I think all of that came along with, ‘How do we make sure consumers will keep engaging with us,'” Iyengar said.
That’s good for companies trying to retain customers and prop up their balance sheets. But for some, keeping customers engaged has turned into making it too difficult to disengage.
“Getting out is a lot harder than getting in,” said William Kovacic, a law professor at George Washington University and a former FTC chair. “That you find yourself in a ‘Hotel California’ situation where you can check out anytime you like, but you can never leave.”
He said one of the most typical versions of this is allowing customers to sign up for a service with the click of a button, but forcing them to call 1-800 numbers with long wait times to cancel or even mail cancelation requests to a physical address.
The most narrow version of the new FTC proposal would require companies to make it just as easy for customers to cancel as it is to sign up — it’s called click to cancel. And Kovacic thinks that version will pass.
“The ease of exit itself is not likely to be seen as by any means a troublesome feature of the rule,” Kovacic said.
The proposal is open for public comment before the FTC finalizes the rule.
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