Canceling digital subscriptions could soon become easier

Technology companies like to make canceling subscriptions extremely difficult – but regulators are starting to crack down

Imagine your favorite author releases a new book, and your local bookstore offers to deliver it to you for free on the day of publication. All you have to do in return is sign up for their new ‘reading club’.

This concerns a monthly amount, for which you will receive a new book of your choice 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 come in that you don’t read, money keeps being debited from your account. And when you finally have time to get to the store, they say they need the cancellation in writing.

They also have a long form you have to fill out, explaining exactly why you want to cancel. Oh, and the person handling the cancellations has the day off. And would you like two weeks of free membership while you think about it? And so membership and payments continue…

Such a scenario may seem ridiculous, but it only sounds absurd because it takes place in the physical world. The online equivalent is common, with many online subscriptions requiring significant effort to cancel – 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 to an end increasing degree of control.

Click to cancel

On October 16, 2024, the US Federal Trade Commission (FTC) introduced a new regulationsalso known as the ‘click to cancel’ rule, which makes it much easier for people to cancel their online subscriptions.

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

Read: Showmax halves subscription costs in deal with Capitec

It may sound like an obvious system that does not require legislation. But our research shows that everyday services – social media platforms, streaming services and even financial trading apps – are often much harder to leave than to join.

Some social media sitesFor example, it takes users a few minutes to join, but 40 minutes to leave.

But the ‘click to cancel’ rule is not without controversy. The FTC’s decision was not unanimous, with members divided along political lines. And legal challenges are already expected.

Companies that could benefit from people having difficulty canceling subscriptions will file a lawsuit to stop the FTC from doing so enforcing his new rule.

So the future of click-to-cancel is already in doubt, and the results of the US presidential election could affect the rule’s survival.

In Great Britain, companies are currently obliged to provide consumers with enough information about subscriptions – but they are not required to give customers the right to opt out of automatic renewal. They are also not required to request permission to begin billing when a free trial period ends.

Instead, they should send reminder messages about the ongoing auto-renewal and provide an easy exit route when charging begins.

Financial services – such as banks, insurance policies or pension providers – are treated slightly differently in that companies need to ensure customers understand what they are signing up for, and steer those customers in the direction “good results”. For example, if a better rate is available, financial services companies should let their customers know and make it easy for them to obtain it.

Making it easy to leave is important as the UK government estimates that subscription traps are costing UK consumers £1.6 billion/year for unwanted services.

But perhaps regulators can go further with sector-specific rules that make signing certain things more demanding. For example, it may be desirable for online gambling to become much more difficult join then leave.

New era

Consumer protection is entering a new era. Regulators have finally recognized that the online space gives platforms and companies the potential to influence customer decisions like never before, and they are starting to take action. But while new rules are being created, keep in mind that you need to be careful about what you click on.

Read: Living as a service? The growth in the number of subscriptions faces a major test

• The author, Richard Whittle, is a University Lecturer in AI and Human Decision Making, University of Salford, and Stuart Mills, Assistant Professor of Economics, University of Leeds
• This article is republished from The conversation under a Creative Commons license. Read the original article