Last week, the Federal Trade Commission (FTC) announced the final rules revisions that are a part of their ongoing review of the 1973 “Negative Option Rule”. The short version of the new rules is that the process for cancelling a subscription agreement must be as easy or easier than the process of entering into it, and there must be clear communication of the terms and documentation of the acceptance of the terms. This will apply to offline and online purchases of products.
Websites for products that sell subscription products / services will need to have the capability for the buyer to easily cancel a subscription product. It will have to be easy to find and easy to use.
The info-sheet published by the FTC states that offline purchases of subscriptions should be supported by an easy cancellation of the subscription through an online process or over the phone.
Why is this Happening?
Now is the time for businesses to look at their processes both online and offline and figure out how they want this portion of their customer journey to work. Too many businesses had predatory processes in place that made it easier for them to retain the recurring revenue at the expense of their customer.
Enough businesses had shady practices that the government felt obliged to step in. So now, all businesses must deal with the consequences. The FTC was fielding nearly 70 complaints per day. That’s just the people that bothered to complain. The actual number of customers affected was probably much, much higher.
When does this go into effect?
This will go into effect no sooner than 180 days AFTER it is published in the Federal Register. As of this date this post is being written, the publication date has not yet been set. There are sure to be some legal challenges. So the exact date isn’t yet clear, but we are looking at March of 2025 at the earliest.
What Should Website Owners Do to Be Compliant
The “Easier Than” wording of the new rule could be viewed as somewhat vague. But the spirit of the rule isn’t. It’s a call for transparency and simplicity in both access and execution.
Subscription customers should have a customer account that is accessible online with a list of active subscriptions and a cancellation process that doesn’t require too many steps to complete.
For everybody that uses a shopping cart system on their website like WooCommerce, I expect to see updates coming in fairly short order that will enable this functionality. Either as a future development of their membership and subscription extensions or as an update to the core functionality of their existing user account page.
How Can MS Digital Solutions Help You?
At MS Digital Solutions, we believe that a transparent and simple cancellation process leads to the best customer experience. Happy customers, even those that are cancelling a subscription, are a great asset to any business. For WordPress websites, we can help you understand your current user experience through a Site Audit and then help you plan the online processes and communicate these changes as necessary to any offline or 3rd party systems or recipients. Need to get an audit started, schedule a 30-minute zoom and specify “Customer Experience Audit” and provide your website URL in the box for additional information. This way we can be prepared for the Zoom.