Canceling Subscriptions Could Get Easier Under New Biden Administration Rules

Politics

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By The New York Times

Published 8 months ago on

August 15, 2024

An instructor with Equinox teaches a treadmill running class in New York on Sept. 26, 2014. A set of policies proposed by the Biden administration could make it easier for consumers to cancel subscriptions, including gym memberships. (Hiroko Masuike/The New York Times)

Biden administration proposes rules to simplify subscription cancellations, ensuring easier exits similar to sign-ups.
New guidelines may require immediate access to live customer service agents, eliminating frustrating automated "doom loops."
Airlines could soon be mandated to offer automatic refunds for significant flight delays or disruptions.

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A set of policies proposed by the Biden administration this week could make it easier for consumers to cancel subscriptions, speak to customer service agents, get flight refunds and more.

Officials said the effort, which was announced Monday and spans several federal agencies, would tackle the ways that different businesses “add unnecessary headaches and hassles to people’s days,” according to a White House statement.

But it was not yet clear how long it would take to implement such a sweeping set of rules. Once a rule is in place, the agency that made the rule can pursue civil penalties against companies who don’t abide.

The U.S. Chamber of Commerce, the nation’s largest business lobbying group, said the regulations would “micromanage business practices” and cost Americans more time and money.

“Businesses succeed by being responsive to customers and have a far better track record of customer service, streamlined paperwork and prompt response times than the federal government,” the group said in a statement online.

Here’s what to know about the initiative.

Hitting ‘Unsubscribe’ Could Be Much Easier

Canceling recurring payments and subscriptions would have to be as easy as signing up for them was in the first place, if a rule proposed by the Federal Trade Commission becomes finalized.

The rule, called the “click to cancel” provision, would apply to everything from gym memberships to online entertainment and more.

Subscription headaches have been a focus of the FTC for over a year. Last June, the agency sued Amazon, accusing the company of tricking its customers into signing up for its Prime service and then making it difficult to cancel. Amazon has denied the claims.

Real People on Customer Service Lines

When a robotic voice begins its long prompt of menu options on a customer service line, a human could be just one click away under a potential new rule by the Consumer Financial Protection Bureau.

The CFPB and other federal agencies are targeting what they call “doom loops,” or the many steps customers often have to go through in order to reach a customer service agent. Under the new guidelines, consumers would need to be able to speak to a real person by pressing one button.

The CFPB holds sway over large banks, credit unions and other lenders.

The Federal Communications Commission is considering similar requirements for phone, broadband and cable companies, according to the White House statement. The Department of Health and Human Services and the Department of Labor called on health providers to do the same, but haven’t proposed new regulations thus far.

Automatic Refunds for Major Flight Delays

This spring, the Transportation Department announced that airlines would be required to automatically refund passengers when their flights are canceled, significantly delayed or disrupted.

Passengers booked on domestic flights delayed by three hours and international flights delayed by six hours would qualify for compensation. Other travel disruptions are also covered, including delays at baggage claim or being downgraded to a lower service class. Extra fees for checking bags and seat selection must also be displayed up front to passengers.

The refunds must be paid back within one to three weeks. The timing of compensation depends on the type of payment customers used when purchasing the flight or any extra services.

Shoppers Will See More Reliable Customer Reviews

Fake customer reviews are officially banned, the FTC announced Wednesday, finalizing a rule proposed in June 2023.

The new rule bans business from using AI-generated reviews and testimonials from people who did not try their product or service. It also prohibits providing compensation in exchange for consumers’ positive reviews.

The rule also prohibits businesses from suppressing negative reviews and buying fake social media followers or views.

The Changes May Not Be Immediate

The policies included in the White House initiative are at different places in the rule-making process. Some were introduced a year ago, while others have yet to be officially proposed.

The process for finalizing rules can take federal agencies anywhere from one to three years, depending on how complicated a policy may be or if there is strong opposition. But a few of these processes have been in the works for some time, including the FTC’s “click to cancel” provision, which was proposed more than a year ago.

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This article originally appeared in The New York Times.

By Sara Ruberg/Hiroko Masuike
c.2024 The New York Times Company