Improving Consumer Protections in Subscription Services
As many consumers know from first-hand experience, it’s often much easier to sign up for a subscription or service than to cancel it. Neera Tanden, President Biden’s domestic policy adviser, said in announcing the new rules that the White House says it is looking to ease that frustration, whether it’s cable TV subscriptions, gym memberships, or other services.
Companies often count on people giving up on terminating subscriptions or services because they profit from making the process time-consuming and frustrating. Whether making customers wait or asking them to jump through other time-consuming hoops, companies often delay or otherwise make it difficult to cancel so that they “can wait longer,” Tanden told reporters at a news conference Friday. Government officials believe these troubles do not happen by accident; companies often intentionally design business processes to be cumbersome or difficult to navigate to discourage consumers from asking for rebates or canceling services they no longer want.
The Federal Trade Commission is expected to finalize a proposal called “click-to-cancel” as early as Monday, requiring companies to make canceling a subscription or service as easy as signing up.
Consumer Protections in Various Industries
Service cancellations are in the spotlight as government agencies target some of the most common consumer complaints. These include airlines, with new rules effective in June. The Transportation Department requires airlines to provide automatic refunds when flights are canceled or severely delayed. The agency now proposes cracking down on junk fees, such as parents having to pay more to sit next to their children while flying.
“The DOT’s rule also requires refunds to be automatic, timely, and paid in full to the original method of payment, ending airline flight-and-fight behavior,” Biden said. “No more struggling or getting stuck with expiring flight credits.” The Biden administration continues to crack down on so-called “junk fees,” but the effort has encountered several obstacles, including industry opposition and court challenges.
Legal Challenges and Progress
A federal judge in May temporarily blocked credit card late payment fee cap rules at $8 per month. The ruling comes in response to a lawsuit filed by the U.S. Chamber of Commerce and the banking industry against the Consumer Financial Protection Bureau.
Despite these challenges, the government is making strides in improving consumer protections in various industries. By implementing rules that make canceling services easier and cracking down on unfair fees, the administration is working towards a fairer marketplace for consumers.
