The Federal Trade Commission is delaying the implementation of a Biden administration rule designed to make it easier for consumers to cancel ongoing subscriptions without facing unnecessary obstacles.
The FTC approved the rule in October, with it initially set to go into effect this month. However, the new rule has faced delays under the Biden administration due to the "complexities" involved in implementing the regulations.
Essentially, the rule would require a straightforward process for canceling subscriptions—such as gym memberships, newspaper deliveries, food services, and other offerings that charge weekly or monthly fees. These changes are part of the FTC’s review of the negative option rule. The federal government defines a negative option as one that “allows a seller to interpret a customer's silence or failure to take affirmative action as acceptance of an offer.”
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Advocates argue that the existing negative option rule is too narrow. The FTC had previously proposed requiring sellers to provide annual reminders and confirmations for non-physical items that are automatically renewed each year. Another proposal suggested that sellers must ask customers if they wish to hear a sales pitch; if the customer responds “no,” the seller would then be required to initiate the cancellation process.
The new rules will prohibit sellers from failing to clearly and conspicuously disclose material terms before obtaining a consumer's billing information in connection with a negative option feature. Additionally, it bans businesses from misrepresenting any material facts when marketing goods or services that include a negative option feature.
With the 60-day delay, the FTC is now scheduled to begin enforcing the new rule on July 14.
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