A new rule that will force businesses to make it easier for customers to cancel unwanted subscriptions and memberships is to be introduced in the US.
The “click-to-cancel” rule will ban retailers and businesses from misleading consumers about subscriptions and require them to obtain people’s consent before charging for memberships, auto-renewals, and programmes linked to free trials.
In the Federal Trade Commission’s (FTC) last major rulemaking before the 5 November election, the agency also said that businesses must let customers end subscriptions as easily as they start them.
Most provisions take effect 180 days after the rule is published in the Federal Register, the agency said.
“The FTC received more than 16,000 public comments throughout this rulemaking process,” FTC chair Lina Khan said in a statement.
“People shared how much of a headache it’s become to cancel all kinds of subscriptions-from gym memberships and meal delivery kits to medication, home repairs, phone plans, and more.
“The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want,” Ms Khan added.
She also highlighted how the pandemic “brought to the surface” these issues, which included requiring in-person cancellations while businesses were closed.
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The Biden administration included the FTC proposal as part of its ‘Time is Money’ initiative.
This was announced in August with the aim of cracking down on consumer-related hassles.
The US Chamber of Commerce criticised the administration’s approach, saying in August that “heavy-handed regulations that micromanage business practices” will lead to higher costs for consumers.
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Democratic presidential nominee vice president Kamala Harris highlighted the “click-to-cancel” rule last month as a policy she would pursue if elected.
FTC commissioners passed the final rule on a 3-2 vote.