CONSUMER advocates have attacked a push from major brands including Disney, Netflix, Amazon, and Meta to make it harder to cancel subscriptions accounts, warning shoppers would be unfairly targeted if a new lawsuit is successful.
The criticism comes after three major industry groups filed a lawsuit to prevent the Federal Trade Commission from enforcing its new “Click to Cancel” rule that requires companies to make it easy for consumers to cancel online subscriptions.
Florida International University Professor of Marketing Anthony Miyazaki says subscription based companies are using “questionable tactics” to rope in consumers[/caption]
Major brands have united to campaign against a new rule making it easier for consumers to cancel online subscriptions[/caption]
Consumer advocates say brands will be unfairly targeted if the new lawsuit is successful[/caption]
The industry groups, including the NCTA – Internet and Television Association, the Electronic Security Association, and the Interactive Advertising Bureau have alleged the rule is “arbitrary, capricious and an abuse of discretion” and would overstep the FTC’s authority.
The major groups represent a number of big brands from the cable industry, home security companies, and advertisers.
Some brands behind the push include Comcast, Charter, Disney, AMC, Paramount, and Warner Bros. The IAB is the industry body with over 700 members including Google, Netflix, Amazon, Meta, Vizio and the NFL, while ESA includes home security giants like ADT.
The new rule could be disastrous for some of these brands who make profit from subscriptions which are easy to start but harder to stop.
The FTC finalized the rule on October 16, following thousands of submissions from individuals, consumer advocates and industry groups.
Under the change, companies must allow consumers to cancel subscriptions online rather than needing to call a support line, send an email, or show up in person.
Businesses will also need to get consent from the consumer for subscriptions, and will not be allowed to conduct auto renewals on memberships.
The cancellation process must be as easy to use as the sign up process.
Announcing the change earlier this month, FTC Commission Chair Lina M. Khan said businesses had too often made people “jump through endless hoops just to cancel a subscription.”
“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,” Khan said.
The rule is due to take effect in about about 180 days after it is published in the Federal Register, which is expected to occur imminently, if the lawsuit from major subscription based brands is unsuccessful.
Consumer advocates and legal experts say the lawsuit would be disastrous for consumers if it is successful.
“QUESTIONABLE TACTICS”
Florida International University Professor of Marketing Anthony Miyazaki exclusively told The U.S. Sun that subscription based companies force consumers through a “maze of clicks or phone calls” to stop recurring payments.
Miyazaki said the rule would have an “extraordinary” benefit for consumers if it is passed successfully.
“Millions of consumers will be spared the frustration of navigating complex processes to cancel their subscriptions, saving them the frustration of navigating complex processes to cancel their subscriptions, saving them from the common last resort action of canceling a credit card as the only way to stop recurring payments,” Miyazaki told The U.S. Sun.
“The expanded rule is supported not only by consumer groups, but also by many ethical industry leaders who want to compete in a fair marketplace.”
Miyazaki said major brands were using “questionable tactics” to prevent consumers from canceling their subscriptions.
He said some brands were fighting the rule change because they were likely to lose substantial revenue from its successful implementation, and may pave the way for class action lawsuits where courts were more likely to rule in the favor of consumers.
“CURB SHADY PRACTICES”
Morgan Legal Group principal Russel Morgan told The U.S. Sun that the new rule helped to “curb shady practices” by companies that make it “very easy to sign up but complicated to cancel” forcing consumers to get stuck with recurring charges for services they know longer want.
“If the lawsuit is successful, it could delay or block any protections for consumers,” Morgan said.
BRANDS NEED TRUST
Former Showtime Networks executive Rob Rosenberg said most reputable companies did not seek to trick or mislead consumers given they wanted to maintain a “trusting” relationship with their customers.
Rosenberg helped develop Showtime’s strategic vision for streaming content and successfully negotiated high profile deals with major industry players including Apple, Amazon and Comcast.
He said the new ‘Click to Cancel’ rule was an attempt to standardize the rules between major brands and consumers, but that many individual states had their own rules requiring constant vigilance by big brands.
