U.S. Senators Brian Schatz (D-Hawaii) and John Kennedy (R-Louisiana) introduced the Unsubscribe Act that would require companies to be more transparent about their subscription-based business models and make it easier for consumers to cancel their subscriptions once their free or reduced-price period has ended.
The Unsubscribe Act was introduced following a recent ruling from the federal court that blocked the Federal Trade Commission’s “click-to-cancel” rule that was set to go into effect in mid-July.
“Our bill will require companies to be more transparent about their business model and make it easier for consumers to avoid costly, automatic monthly charges they never intended to make,” said Schatz.
“The subscription-based business model is exploding, and it’s largely because of the deceptive practices that some companies use to lure and trap in customers. When people sign up for a free trial, they shouldn’t have to jump through hoops just to cancel their subscription before being charged.”
For Kennedy, this is all about being transparent and giving access to cancel.
“The average American is all too familiar with the headache of running around in circles to cancel a subscription before their free trial expires,” said Kennedy.
“Our common-sense Unsubscribe Act would make sure companies are upfront about automatic charges and make it easier to cancel subscriptions without the convoluted song-and-dance routine.”
Subscription-based services have become a key part of today’s economy, from video streaming to food delivery and many more. The use of free and low-cost trial offers help attract new customers to these subscription-based services. These trial periods gives consumers a chance to explore these services for free or at a lower cost before committing to a paid subscription.
However, some subscription providers rely on deceptive marketing, confusing contracts, and restrictions that make it difficult for consumers to cancel their subscriptions.
Based on the press release, the Unsubscribe Act would:
– Require sellers to provide customers with a clear understanding of all the terms of the contract and obtain the customer’s express and informed consent;
– Require sellers to provide a simple means of canceling the subscription, which the customer can complete in the same way in which the original contract was entered into;
– Require sellers to provide a clear notice to consumers when their free or reduced-cost trial is complete and before charging for the full-cost subscription;
– Disallow automatic transfer to a contract beyond the preliminary period; and
– Require sellers to periodically notify the customer of the terms of the contract and the cancellation mechanism.
The Schatz-Kennedy legislation is supported by Consumer Action, Truth in Advertising, the National Consumer League (NCL), Public Citizen, and the Consumer Federation of America.
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