In what many consider a huge win for consumers, the US Federal Trade Commission (FTC) has made canceling subscriptions easier.
The new “click to cancel rule” means consumers will not have to endure excessive hurdles to cancel subscriptions. It will go into effect in approximately six months after receiving over 16,000 comments from the public.
What does the new rule do exactly?
The rule prevents over-complicated hurdles of unsubscribing from a plan and “prohibits misrepresenting any material facts while using negative option marketing.”
Commission Chair Lina M. Khan, said in a news release that “too often, businesses make people jump through endless hoops just to cancel a subscription.”
Adding: “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.”
Which industries are likely going to be impacted most by this?
- Streaming services (like Netflix, Hulu, and music platforms): They rely heavily on subscriptions and have complex cancellation processes.
- Fitness and gym memberships: Known for contracts that are tough to exit, gyms often require calls or in-person visits to cancel.
- Retail subscription boxes: Monthly boxes for clothes, food, or other items often make it hard to unsubscribe without jumping through hoops.
- Software-as-a-Service (SaaS): Many companies in the tech world use recurring subscriptions for their tools, and some make cancellation a multi-step process.
- Online publications: Digital news and magazine subscriptions often require speaking with customer service or navigating confusing menus to cancel.
- Telecom providers: Internet and phone companies are notorious for making cancellation a drawn-out process involving customer support.
Opinion – It’s time to get rid of the roach model
Signing up for a subscription usually only takes a few minutes. The process is easy. This is not typically the case when it comes to unsubscribing. And this is often by design; known as “the roach model”.
So, what is a roach model? It’s a bit like cockroaches—once they’re in, they’re hard to get rid of. Many companies use a similar approach when it comes to subscriptions. They employ sneaky tactics that make canceling more complicated than signing up in the first place.
Instead of offering a simple “cancel” button, they add extra steps, bury options in menus, or force consumers to interact with customer service, hoping they’ll give up and keep paying.
These barriers aren’t just frustrating—they’re designed to trap consumers into staying longer than they may want.
It’s entirely normal for companies to encourage existing subscribers to continue with their plans. However, this specific method, from a consumer point of view, is a big hassle, confusing, and time-consuming.