Federal Rule Proposes Making Subscription Cancellations as Easy as Signup

In a bid to strengthen consumer protections against corporations, the Biden administration unveiled a series of new policies aimed at addressing the “headaches and hassles that waste Americans’ time and money.” This announcement was made on Monday and involves initiatives from both the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC).

One of the significant components of these policies is the push for companies to simplify the cancellation process for subscriptions and memberships, matching the ease of signing up. Additionally, a new rule introduced by the Consumer Financial Protection Bureau will ensure that customers have the ability to reach a live representative when faced with automated customer service systems. This rule allows consumers to bypass frustrating automated “doom loops” by pressing a single button.

White House Domestic Policy Advisor Neera Tanden highlighted the disparity between signing up for services and canceling them, stating, “For most services, it takes one or two clicks to sign up. It should take one or two clicks to end the service as well.” This rule could apply to various services, including gym memberships and subscriptions with telecommunications companies.

Furthermore, the administration is urging health insurance companies to streamline the claims process to allow for online submissions, eliminating the need for customers to print and mail forms. Tanden pointed out that many companies deliberately complicate these processes to control consumer money for extended periods. She remarked, “Essentially, in all of these practices, the companies are delaying services to you or, really, trying to make it so difficult for you to cancel the service that they get to hold on to your money longer and longer. Ultimately, consumers, the American public, are losing out.”

While these regulations were announced on Monday, implementation will occur over various timelines, with some expected to be rolled out in weeks and others in months, according to administration officials. These policies are introduced at a time when many Americans are feeling the pinch from high prices and persistent inflation—issues that have heavily influenced President Biden and Vice President Kamala Harris’s campaign efforts as voters continue to prioritize economic concerns.

As part of an ongoing commitment to “lowering costs,” the administration is striving to boost voter confidence in the economy through a series of strategic initiatives aimed at reducing everyday expenses. These initiatives include lowering prescription drug prices and addressing student loan debt relief.

Recently, the stock market experienced volatility following a weaker-than-expected jobs report, intensifying the pressure on Democrats to prove their economic credibility to voters. While experts caution against making hasty conclusions from market fluctuations, opinions remain divided on whether the U.S. is approaching a downturn or continuing on a path of resilience and growth.

In addition to these new measures, the Biden administration has made various efforts to help reduce everyday financial burdens. These include addressing excessive junk fees associated with tickets and hotel stays, mandating that airlines automatically refund passengers for flight delays, and prohibiting medical debts from appearing on credit reports.

The administration has encountered challenges from large corporations, as they have been accused of “shrinkflation,” a term used to describe the practice of offering less product for the same price, while maintaining elevated prices despite a drop in inflation. Antitrust advocates have applauded the Biden administration for reviving enforcement mechanisms that hold companies accountable, marking a substantial shift in regulatory actions taken against major corporations, including lawsuits against Google, Apple, and LiveNation.

Tanden emphasized the intention behind Monday’s initiatives, clarifying that they are not aimed at targeting specific companies or shaming corporations. She noted, “This is a broad initiative addressing practices across multiple industries, focusing on ensuring that consumers and their choices drive market decisions, rather than practices that hinder consumer autonomy.” She added that consumers should have the freedom to shop for different services after ending a subscription, which is fundamental to a free market.

Ultimately, the mission is to empower individuals to make their own decisions without facing obstacles set by companies.