Do you have a resolution to unsubscribe? The Federal Trade Commission provision has heard consumer complaints about the difficulty of unsubscribing from annual plans. Enter the “Click to Cancel” mandate.
The Difference of a Click
FTC Chair Lina M. Khan released a statement regarding this new rule: “Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place….The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”
This revision is a continuation of the FTC’s decades-long review of its 1973 Negative Option Rule that protects consumers against unfair and deceptive practices relating to subscriptions, memberships, and other recurring fees. Annually, the FTC fields thousands of complaints from consumers regarding transparency in cancellation policies, and while there are a number of laws in place to regulate these practices, the FTC also provides updates that reflect changing consumer demands for transparency in cancellation policies.
Key Differences in the New Proposal
The new proposal gives businesses key new guidance. First, if consumers can subscribe on the website, they must be able to cancel on the website, using the same number of steps. Second, businesses must ask consumers if they are interested in other options or modifications to their subscriptions before offering them. Often in online cancellation procedures, businesses first make other offers before proceeding to the cancellation screen; this new rule gives the consumer a faster cancellation process. Lastly, businesses must notify consumers prior to any annual renewal of services. This excludes physical goods. A complete fact sheet from the FTC that offers more guidance on what these rules mean for businesses is available here.
Consumer Surveys and Negative Option Marketing
How might consumer survey research play a role in how businesses comply with newly proposed changes to the 1973 Negative Option Rule? Consumer survey research may be used by businesses to measure how clear their cancellation procedures are. When FTC enforcement is at stake, it will be important for businesses to explicitly mark disclosures with visual and written information that a reasonable consumer can find. Similarly, if litigation or a regulatory challenge were to arise, consumer survey research could be used to measure consumer understanding of how to cancel or opt out.
MMR Strategy Group provides reliable consumer survey research whenever marketing messaging comes into question. Contact us today to learn more.