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Starting Jan 14, 2025 - subscription services will be requires to make it easy for consumers to cancel. You can't hide cancellation options deep into your settings and make it difficult for consumers to cancel anymore. Obviously the telecom companies tried to sue to stop this, but from my research it is full steam ahead come Jan 14th. Compliance with the rule will not be required until May 14 2025.
Note: "negative option contracts" are situations where if the consumer does nothing it assumes they want to keep the service. Hence why SAASes fall under this FTC ruling.
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I will say one thing about formerly running a SAAS, a STAGGERING amount of people sign up, pay, and never log back in ever again. Several people pay with their employer's cards and then end up leaving the company and those subscriptions just kept getting charged.
And then Visa and the other major card providers have "auto update" so if your credit card expires, the system will auto-update to the newest card without consumers needing to re-enter their information because of an expired card.
So you do have scenarios where cards will keep getting charged forever if people aren't vigilant in their finances.
Major corporations' accounting departments barely can keep up with all these chargers here and there to the point people are sending fake invoices to Google and Facebook and those corporations just paid them: Man Pleads Guilty To Phishing Scheme That Fleeced Facebook, Google Of $100 Million
I've seen small business just rack up chargers because the accounting departments are not paying attention or doing follow ups.
So people just forgetting they subscribed to a service is one of the dirty secrets of revenue from ALL subscription services. It's shocking to see it first hand.
I will say this - this will probably not stop people from forgetting about these charges unless they have an accountant or bookkeeper on top of things so I doubt it will impact businesses that much. If a user wants to cancel they're going to cancel one way or another.
Note: "negative option contracts" are situations where if the consumer does nothing it assumes they want to keep the service. Hence why SAASes fall under this FTC ruling.
WASHINGTON, Nov. 20, 2024 – New federal rules designed to make it easier to cancel broadband service are set to take effect early in 2025, though compliance will not be required for a few months. The rules have been challenged in court by a trade group for broadband Internet Service Providers.
Federal Trade Commission click-to-cancel rules will take effect Jan. 14, 2025 but compliance with the rules will not be required until May 14, 2025, according to an FTC announcement.
The rules, adopted by the FTC under Chair Lina Khan last month, are designed to allow consumers to cancel service with a single mouse click. The rules target negative option contracts that continue periodic charges unless the customer has canceled.
The new rules have faced strong pushback from trade groups concerned the rules were not the right approach.
Source: https://broadbandbreakfast.com/ftc-click-to-cancel-rules-to-take-effect-jan-14-2025/
Federal Trade Commission click-to-cancel rules will take effect Jan. 14, 2025 but compliance with the rules will not be required until May 14, 2025, according to an FTC announcement.
The rules, adopted by the FTC under Chair Lina Khan last month, are designed to allow consumers to cancel service with a single mouse click. The rules target negative option contracts that continue periodic charges unless the customer has canceled.
The new rules have faced strong pushback from trade groups concerned the rules were not the right approach.
Source: https://broadbandbreakfast.com/ftc-click-to-cancel-rules-to-take-effect-jan-14-2025/
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The “click-to-cancel” rule will prohibit retailers and other businesses from misleading people about subscriptions and require them to obtain consumers’ consent before charging for memberships, auto-renewals and programs linked to free trial offers.
The FTC said businesses must also disclose when free trials or other promotional offers will end and let customers end recurring subscriptions as easily as they started them. Most of the provisions take effect 180 days after the rule is published in the Federal Register, the agency said.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Chair Lina Khan said in a statement. “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.”
Source: https://apnews.com/article/ftc-rule...ions-renewal-fb11fe0392c0b60acd131267bcc2eb4a
The FTC said businesses must also disclose when free trials or other promotional offers will end and let customers end recurring subscriptions as easily as they started them. Most of the provisions take effect 180 days after the rule is published in the Federal Register, the agency said.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Chair Lina Khan said in a statement. “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.”
Source: https://apnews.com/article/ftc-rule...ions-renewal-fb11fe0392c0b60acd131267bcc2eb4a
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The final rule will provide a consistent legal framework by prohibiting sellers from:
- misrepresenting any material fact made while marketing goods or services with a negative option feature;
- failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature;
- failing to obtain a consumer’s express informed consent to the negative option feature before charging the consumer; and
- failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.
Source: Federal Trade Commission Announces Final “Click-to-Cancel” Rule Making It Easier for Consumers to End Recurring Subscriptions and Memberships
- misrepresenting any material fact made while marketing goods or services with a negative option feature;
- failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature;
- failing to obtain a consumer’s express informed consent to the negative option feature before charging the consumer; and
- failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.
Source: Federal Trade Commission Announces Final “Click-to-Cancel” Rule Making It Easier for Consumers to End Recurring Subscriptions and Memberships
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I will say one thing about formerly running a SAAS, a STAGGERING amount of people sign up, pay, and never log back in ever again. Several people pay with their employer's cards and then end up leaving the company and those subscriptions just kept getting charged.
And then Visa and the other major card providers have "auto update" so if your credit card expires, the system will auto-update to the newest card without consumers needing to re-enter their information because of an expired card.
So you do have scenarios where cards will keep getting charged forever if people aren't vigilant in their finances.
Major corporations' accounting departments barely can keep up with all these chargers here and there to the point people are sending fake invoices to Google and Facebook and those corporations just paid them: Man Pleads Guilty To Phishing Scheme That Fleeced Facebook, Google Of $100 Million
I've seen small business just rack up chargers because the accounting departments are not paying attention or doing follow ups.
So people just forgetting they subscribed to a service is one of the dirty secrets of revenue from ALL subscription services. It's shocking to see it first hand.
I will say this - this will probably not stop people from forgetting about these charges unless they have an accountant or bookkeeper on top of things so I doubt it will impact businesses that much. If a user wants to cancel they're going to cancel one way or another.