Click to Cancel: A Win for Consumers
The Consumer Bureau Strikes Back
It’s simple, really.
If you can click to subscribe to a service, you should be able to click to cancel.
But, many subscription-based services make you jump through hoops to cancel a service you very easily signed up for.
The reason is simple enough: Companies want it to be easy to sign up, so they can get your money.
And, you want signing up to be easy, so you can start that subscription and get the benefits (streaming services, grocery delivery, an online news service).
At the same time, if canceling were easy, companies might lose revenue.
While many people subscribe to services they only sometimes or rarely use, a subscription means they keep paying.
However, if you want to cancel but you can’t find an “easy button” on the website or app, you may just give up.
Sometimes, you have to make a phone call. But the number is not easily visible and the customer service at the call center is really just one last sales pitch to keep you subscribing.
I recall this with a newspaper subscription.
I called to cancel after finally finding a number.
They offered me the newspaper online for $1 a month. For a year.
After which, it would go back up if I forgot to cancel. But, I didn’t forget.
Win for me!
But that sort of vigilance and persistence shouldn’t be necessary.
That’s why the Federal Trade Commission’s (FTC) new “click to cancel” rule is so exciting.
The rule essentially says it should be as easy to cancel a service as it is to sign up.
On the one hand, companies that want to make a sales pitch to keep you around by forcing you to call could also require a phone call to sign up for a service.
But, that’s cumbersome and risks low uptake.
And, Click to Cancel means subscription services will likely lose some revenue.
As Matt Stoller points out:
Why does this rule, which is supposed to go into effect in six months, matter? Well, it’s because “the subscription economy” has exploded in recent years, at almost a trillion dollars in value.
That’s a lot of cash.
And click to cancel means potentially somewhat less cash.
It also levels the playing field.
A slew of recent actions against big banks and other firms indicates that leveling the playing field and providing great customer service is not exactly on the minds of companies seeking to turn a profit in the consumer finance world:
For example, a CFPB report on car loans indicates that illegal repossessions are a common problem:
Among the illegal practices identified by the CFPB were the assessment of fees where no service was provided to the borrower and continuing with the repossession of a car even after a borrower had made a requested payment.
Then, there’s TD Bank.
The giant Canadian bank was recently fined for facilitating money laundering.
Before that, TD got into trouble for reporting inaccurate information on consumer credit reports:
The CFPB's order says TD Bank reported inaccurate negative information about consumers to credit reporting agencies, including reporting delinquent balances or bankruptcies that had not happened. The result was a negative impact on the consumer's credit report, which impacted both the ability to borrow and the cost of obtaining credit. Credit reports are also often used in determining whether or not to rent to someone and in some cases, are used in employment decisions.
And Fifth Third Bank was fined recently in a fake account and auto lending scandal:
“The CFPB has caught Fifth Third Bank illegally loading up auto loan bills with excessive charges, with almost 1,000 families losing their cars to repossession,” said CFPB Director Rohit Chopra. “We are ordering the senior executives and board of directors at Fifth Third to clean up these broken business practices or else face further consequences.”
So, Click to Cancel is a potentially deadly arrow in the quiver of consumers who too often lack the power to take down monopolistic players who provide services used in daily life.
I remember I had an AOL Internet early during the start of the Internet. The company refused to cancel my subscription. It was only after 4 attempts I finally canceled my subscription.