WASHINGTON, DC – When it comes to companies offering ‘free trials’ for subscription services, U.S. Senator Jack Reed (D-RI) 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.

Today, Reed joined U.S. Senator Chris Van Hollen (D-MD) in introducing the Consumer Online Payment Transparency and Integrity (Consumer OPT-IN) Act to halt the use of unfair and deceptive practices in ‘negative option marketing’ (where consumers enroll in subscription plans that automatically renew unless consumers actively opt out before a given renewal).  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.” 

The lawmakers say Congress must act in the wake of the U.S. Court of Appeals for the Eighth Circuit ruling last week that vacated the Federal Trade Commission’s (FTC) 2023 ‘click to cancel’ rule, which would have taken effect today and complemented this legislation by making it easier to get out of unwanted subscriptions. As a result of this ruling, businesses are free to continue using deceitful practices that trap consumers into making recurring payments that they never intended to make – underscoring the need to codify into law the “opt-in” requirements in this legislation.

“While companies have made it easier than ever to sign up for subscription-based services, too many Americans know the frustration of jumping through endless hoops to get out of them. Corporate special interests are pushing to preserve the status quo so they can pad their profits by keeping consumers locked into unwanted subscriptions, but we will keep fighting back. Our legislation puts consumers in control – offering them an easy way out of subscription traps and holding companies accountable for these deceptive practices,” said Senator Van Hollen.

“This legislation will make it easier for consumers to cancel subscriptions they don’t want. The process of enrolling and cancelling should be equally simple: If one click can sign you up, then you should be able to cancel with one click too,” said Senator Reed. “Simplifying the process for ending ‘free trials’ or unwanted subscriptions will save consumers real money.  This bill will get rid of needless cancellation hurdles, hold corporations accountable, and save consumers time, money, and peace of mind.”

Companies increasingly use free trial offers and unclear terms and conditions to trap consumers into subscriptions. 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. While the FTC has dedicated significant resources to combatting the worst of these business practices, resulting in at least $110 million worth of refunds returned to consumers over the past five years, more action is needed. To more effectively deter companies from employing these practices and better protect and inform consumers, the Consumer OPT-IN Act would limit the use of deceptive tactics and impose stricter notification requirements on companies.

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. It 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 Richard Blumenthal (D-CT), John Fetterman (D-PA), Kirsten Gillibrand (D-NY), Mazie Hirono (D-HI), Ben Ray Luján (D-NM), Jeff Merkley (D-OR), Bernie Sanders (I-VT), Peter Welch (D-VT), and Ron Wyden (D-OR).

The Consumer OPT-IN Act has been endorsed by Public Citizen, National Consumer Law Center, Consumer Action, Americans for Financial Reform, and American Economic Liberties Project.

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: https://reportfraud.ftc.gov

Companion legislation is being introduced in the U.S. House of Representatives by Congresswoman Yvette D. Clarke (D-NY-9).