Legislation comes after court action against FTC rule to make unsubscribing easier
WASHINGTON — This week, Representative Lou Correa (D-CA) joined Representative Yvette D. Clarke (D-NY) and U.S. Senator Chris Van Hollen (D-Md.) in reintroducing the Consumer Online Payment Transparency and Integrity (Consumer OPT-IN) Act, bicameral legislation to protect consumers from online free trial scams and hard-to-cancel recurring-payment programs.
“It takes five seconds to subscribe to a service online, which can end up costing Americans hundreds of dollars per year. It should be just as easy for hardworking Americans to cancel,” Correa said. “Click to cancel means hardworking Americans can choose how they spend their money, without jumping through impossible hoops to get out of services they don't want.”
The lawmakers’ bill puts the onus on companies rather than consumers when it comes to subscriptions and memberships, including requiring a shift from “opt-out” conditions to “opt-in.” This reintroduction comes after the U.S. Court of Appeals for the Eight Circuit last week vacated the Federal Trade Commission’s (FTC) 2023 “click to cancel” rule, which would have complemented this legislation by making it easier to get out of unwanted subscriptions. As a result of this ruling, businesses are free to continue using deceptive practices that trap consumers into making recurring payments that they never intended to make – underscoring the need to codify into law the “opt-in” requirements in this legislation.
“Too often, consumers find themselves unknowingly caught in a cycle of recurring charges for subscriptions that extend far beyond what they initially agreed to. That was what the FTC aimed to mitigate with their ‘Click to Cancel’ rule, which required subscription services to make cancellation just as streamlined as sign up, reducing deceitful business practices that play with people's hard earned money. Despite the Eighth Circuit Court of Appeals striking this rule down earlier this week due only due to a procedural issue, protecting consumers is too important a task to delay. That is why I am proud to join Senator Van Hollen in introducing the Consumer Online Payment Transparency and Integrity (Consumer OPT-IN) Act, which will build upon the FTC’s efforts to shield consumers from being locked into recurring subscription agreements they didn't consent to. I look forward to carrying this legislation through Congress alongside my colleagues,” Clarke said.
“While companies have made it easier than ever to sign up for subscription-based services, too many Americans know the frustration of jumping through endless hoops to get out of them. Corporate special interests are pushing to preserve the status quo so they can pad their profits by keeping consumers locked into unwanted subscriptions, but we will keep fighting back. Our legislation puts consumers in control – offering them an easy way out of subscription traps and holding companies accountable for these deceptive practices,” Van Hollen said.
This legislation is endorsed by Public Citizen, National Consumer Law Center, Consumer Action, Americans for Financial Reform, and American Economic Liberties Project.
In the Senate, the Consumer OPT-IN Act is cosponsored by Senators Richard Blumenthal (D-Conn.), John Fetterman (D-Pa.), Kirsten Gillibrand (D-N.Y.), Mazie Hirono (D-Hawaii), Ben Ray Luján (D-N.M.), Jeff Merkley (D-Ore.), Jack Reed (D-R.I.), Peter Welch (D-Vt.), and Ron Wyden (D-Ore.). In the House, it is cosponsored by Representatives Robin Kelly (D-Ill.) and Doris Matsui (D-Calif.).
Companies increasingly use free trial offers and unclear terms and conditions to trap consumers into subscriptions. Additionally, companies often use software and interfaces that subtly trick users, called dark patterns, making it harder for consumers to end these subscriptions and stop unwanted charges. While the FTC has dedicated significant resources to combatting the worst of these business practices, resulting in at least $110 million worth of refunds returned to consumers over the past five years, more action is needed. To more effectively deter companies from employing these practices and better protect and inform consumers, the Consumer OPT-IN Act would limit the use of deceptive tactics and impose stricter notification requirements on companies.
The Consumer OPT-IN Act will protect consumers from deceptive free trials and marketing tactics by:
- Requiring companies to get express informed consent from consumers before converting free trials into automatically renewing contracts and charging consumers;
- Requiring companies to notify consumers of the first automatic renewal and obtain express informed consent from consumers before automatically renewing long term contracts;
- Requiring that companies offering contracts that automatically renew on a short-term basis get express informed consent from consumers annually;
- Requiring companies that have knowledge that a consumer isn’t using their products or service for 6 months to get the consumer’s express informed consent to continue billing, and allowing consumers to request a refund for the remaining portion of the contract;
- Providing consumers with refunds when violations occur;
- Giving the FTC rulemaking authority over negative option contracts, automatic renewals, and dark patterns.
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