Reed, Colleagues Introduce Consumer OPT-IN Act to Make Cancelling Subscriptions Easier for All
New legislation would make it easier for consumers to 'click to cancel' hard-to-stop free trials, auto-renewals, and subscriptions
WASHINGTON, DC – When it comes to companies offering ‘free trials’ for subscription services, U.S. Senator Jack Reed says they should actually be free. And when it comes time to cancel unwanted recurring subscriptions, Senator Reed says it should be just as simple to cancel as it was to sign up.
Senator Reed has welcomed the Federal Trade Commission’s (FTC) recently proposed “click to cancel” rule to make it easier for consumers to get out of unwanted subscriptions, memberships, and other recurring-payment programs. The proposal is part of the FTC’s ongoing review of its 1973 Negative Option Rule, which the agency uses to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs.
Today, Reed joined U.S. Senator Chris Van Hollen (D-MD) in introducing the Consumer Online Payment Transparency and Integrity (Consumer OPT-IN) Act. This legislation would help protect consumers from online ‘free trial’ scams and hard-to-cancel recurring-payment programs by requiring companies with customers on recurring payment programs to offer easy online cancellation.
The bill puts the onus on companies, not consumers, when it comes to extending subscriptions and memberships, including requiring a shift from “opt-out” conditions to “opt-in.” This legislation complements the FTC’s proposed “click to cancel” rule to make it easier for consumers to get out of unwanted subscriptions.
“While companies have made it easier than ever to sign up for subscription-based services, they have also come up with deceptive ways to make it harder than ever to get out of them. Our Consumer OPT-IN Act puts Americans back in control by requiring companies to provide clear options to their customers – and ensure they know what they’re signing up for,” said Senator Van Hollen.
“This legislation will make it easier for consumers to cancel ongoing subscriptions they no longer want. If you can click once to sign up, there’s no reason you can’t click once to cancel. It will save consumers real money by simplifying the process for ending ‘free trials’ or unwanted subscriptions. The process of enrolling and cancelling should be equally simple. This bill will get rid of needless cancellation hurdles, hold corporations accountable, and save consumers time, money, and peace of mind,” said Senator Reed.
Too often, companies use free trial offers and unclear terms and conditions to trap consumers into subscriptions. From 2017-2019, the Better Business Bureau received 58,400 complaints related to free trials scams. Additionally, companies often use software and interfaces that subtly trick users, called dark patterns, making it harder for consumers to end these subscriptions and stop unwanted charges.
Last year, the internet phone service provider Vonage reached a $100 million settlement with the FTC over charges that it created significant cancellation hurdles and failed to provide a simple method for customers to cancel their telephone services.
To better protect and inform consumers, the Consumer OPT-IN Act would limit the use of deceptive tactics and impose stricter notification requirements on companies. This legislation would help advance President Biden’s initiative to combat unreasonable “junk fees,” unwarranted and deceptive charges that some companies impose on consumers to pad their profits.
The Consumer OPT-IN Act will protect consumers from deceptive free trials and marketing tactics by:
- Requiring companies to get express informed consent from consumers before converting free trials into automatically renewing contracts and charging consumers;
- Requiring companies to notify consumers of the first automatic renewal and obtain express informed consent from consumers before automatically renewing long term contracts;
- Requiring that companies offering contracts that automatically renew on a short-term basis get express informed consent from consumers annually;
- Requiring companies that have knowledge that a consumer isn’t using their products or service for 6 months to get the consumer’s express informed consent to continue billing, and allowing consumers to request a refund for the remaining portion of the contract;
- Providing consumers with refunds when violations occur;
- Giving the FTC rulemaking authority over negative option contracts, automatic renewals, and dark patterns.
In addition to Van Hollen and Reed, the bill is also cosponsored by U.S. Senators Ben Ray Luján (D-NM), Richard Blumenthal (D-CT), and Ron Wyden (D-OR).
The Consumer OPT-IN Act has been endorsed by Public Citizen, National Consumer Law Center, Public Interest Research Group’s (PIRG) Federal Consumer Program, and Consumer Action.
Consumers who feel they have been unfairly charged for an unwanted subscription or if a company used deceptive tactics to prevent them from cancelling may report it to the FTC: ReportFraud.ftc.gov