Cancel Anytime: FTC Announces Click-to-Cancel Rule

This rule is far-reaching, even applying to businesses that might be getting scammed, but there are some things to be aware of.

First, while the rule notes that companies can’t make it expensive to cancel by, for example, providing a toll-free number to sign up, but a toll number to cancel, it doesn’t seem to prohibit early termination fees. Early termination fees (ETFs) are at the heart of the ongoing Adobe case, but the issue is that Adobe hid the fact that their “paid monthly” plan was actually an annual plan that you simply paid for monthly.

It doesn’t seem that companies are prohibited from charging ETFs as long as they are very clear about them upfront. That means that consumers have to be extra careful to read all the terms before signing up for one of these services.

Second, “as easy to cancel as it is to sign up” is a bit subjective, and implies that a sufficiently complicated sign-up process might allow for a more complicated cancellation process, though the FTC does make an effort to close some potential loopholes. For example, even if a business actually set its operating hours from midnight to 3 am, it wouldn’t be able to limit the time it takes cancellation calls to those times. The FTC notes that even a small company with strange hours could have an answering machine that takes cancellation calls.

This isn’t likely to be an issue with huge tech companies that have spent decades streaming the subscription process, but it is something to look out for.

Third, click-to-cancel only applies to subscriptions, so if you have a subscription that’s part of a larger contract, canceling the subscription does not void the rest of the contract. This is mostly applicable to business-to-business interactions, but it’s nice to know that the click-to-cancel rule will also help small businesses from getting scammed.