The Federal Trade Commission will hold a hearing early next year on a proposed rule aimed at making it easier for consumers to opt out of automatically renewing subscriptions, according to a Monday press release.
The hearing, which is scheduled to occur online at 10 a.m. EST Jan. 16, will allow six organizations to publicly air their positions on the proposed rule: home maintenance services company Frontdoor, the Interactive Advertising Bureau, International Franchise Association, NCTA – The Internet & Television Association, the Performance Driven Marketing Institute and TechFreedom.
Those organizations were among the approximately 1,100 commenters that posted over 16,000 comments on the proposed rule. In its comments, home maintenance services company Frontdoor specifically requested an informal hearing to discuss the proposed rule before the FTC moved to finalize. The company also argued that many U.S. states already have “rigorous laws” that cover automatically renewing payment plans.
NCTA – The Internet & Television Association argued in its comments that the FTC should tailor the requirements of the rule to “specific industries with widespread unfair or deceptive practices.” It also warned of “significant negative unintended consequences” for the cable/broadband and video streaming industries if the proposed rule is approved.
The Performance Driven Marketing Institute cited research by the British government in its comments that found “only 5 percent of subscriptions are unwanted by consumers.” PDMI also raised concerns about the cost of compliance with the FTC’s proposed rule. “The Commission has estimated compliance costs of approximately $5.7 million (including about $1 million in recordkeeping costs and $4.7 million in disclosure costs),” PDMI said in its comments. It also added that other regulators have estimated the costs to be much higher.
The FTC first proposed the rule in March with the goal of curbing subscription renewal abuses by companies. The proposed rule would update the 1973 Negative Option Rule, and would include a “click to cancel” provision that would make it as easy to cancel recurring payments for cosmetics, newspapers and gym memberships as it is to sign up.
“Companies too often manipulate consumers into paying for subscriptions for goods and services that they don’t want,” FTC Chair Lina Khan said in a March statement. The problem has only gotten worse since the passage of the 1973 rule, she added.
The FTC did not immediately respond to a request for comment on the January hearing.
