By Paul Blest, More Perfect Union
If you’ve ever attempted to navigate the gauntlet that is canceling a gym membership or streaming service in America, you’re in luck.
The Federal Trade Commission announced a long-awaited final rule this week to make it easier for customers to cancel subscriptions and memberships, including options to cancel online. The rule, which is set to take effect next April, also increases transparency standards for companies to explain what customers are agreeing to before they sign up, and sets penalties for companies that don’t comply.
"The idea is simple: for any product or service, it should be as easy to cancel as it is to sign up,” FTC Chair Lina Khan told More Perfect Union last year. “And you should be able to cancel in the same way you signed up."
For example: Planet Fitness, one of the largest chains of fitness centers in the U.S., has a sign-up process that requires just two minutes online. Canceling, however, is a much more arduous process, usually requiring an in-person visit and arbitrary cancellation deadlines in order to avoid one last monthly charge.
Under the new rule, Planet Fitness and other companies with similar practices will be required to offer an online cancellation option. The company’s stock fell after the FTC’s announcement Wednesday, though it’s recovered some of those losses since then.
The U.S. Chamber of Commerce, the nation’s primary business lobbying group, implied they were considering legal action and denounced the rule, calling it “the latest power grab by the Commission in its pursuit to micromanage business decisions.”
“Not only will this rule deter businesses from providing sensible, consumer-friendly subscriptions, but it will leave Americans with fewer options, higher prices, and more headaches,” the Chamber of Commerce said.
FTC received more than 16,000 public comments on the rule, however, a clear majority of which backed the proposal. One woman pointed out that she and her husband joined Planet Fitness before the pandemic, but were frustrated at every turn attempting to cancel a service for which they never even received membership cards.
“When we called and emailed, we were told we couldn't cancel that way. We had to send a certified letter or go in person. We have gone in person twice to try to cancel [our] membership and it has been a nightmare,” she said. “We are still trying to break up with Planet Fitness. And we've used our gym membership ZERO times.”
“I'm at my wit’s end,” the commenter added. “It shouldn't be like this. We shouldn't allow corporations to hold Americans hostage like this.”
The FTC has carried out a number of actions over the past few years to refund customers who were trapped in subscriptions, sometimes without their consent, including internet service provider cloud communications company Vonage and online education company ABCmouse, the latter of which was taken during the Trump administration. The two Republican FTC chairs, however, dissented from the click-to-cancel rule.
The FTC has also alleged similar misconduct on the part of Amazon, specifically its Amazon Prime service. Before the company changed its practices in 2023, the FTC said, the company used a “labyrinthian” cancellation process known internally as “Iliad,” a reference to the Greek epic poem about the Trojan War.
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” Khan said last year. “These manipulative tactics harm consumers and law-abiding businesses alike. The FTC will continue to vigorously protect Americans from “dark patterns” and other unfair or deceptive practices in digital markets.”
Lina Khan is my hero. Vote the right way to be sure we keep her on the job.