The government is trying to regulate the fast-growing $650B subscription economy

Subscription businesses often make it hard to cancel a service. Regulators are stepping in.

June 4, 2021

Pet food, groceries, fitness programs, TV, a random box of bones — what can’t we subscribe to these days?

But the subscription economy — worth ~$650B and projected to hit $1.5T by 2025 — is growing faster than the Federal Trade Commission (FTC) can regulate it, The Washington Post reports.

The FTC is exploring ways to respond to consumer complaints, but the agency is understaffed — and new rules take time to implement.

Right now, customers have 2 big gripes

The first is “negative-option” billing.

Many subscription companies use negative-option marketing, which is when a customer’s inaction serves as permission to be charged. It’s like when you forget to cancel a trial, so you get enrolled for a full month.

Negative-option billing is fine if the company is clear about what will happen, but companies that aren’t upfront violate the Restore Online Shoppers’ Confidence Act (ROSCA) of 2010.

Example: In 2016, the FTC made beauty supplement company NutraClick change its practices and repay $350k for offering “free” samples that turned into subscriptions.

The other gripe: Subscriptions are hard AF to cancel

ROSCA states businesses need to provide “simple mechanisms” to cancel, but doesn’t define simple. So, the process could actually be more complicated — like making someone who signed up online call customer service.

For now, some credit card companies are providing the extra rules for business. Because guess who customers complain to when they get a surprise bill?

Hint: they rhyme with “SchAmex” and “Bisa.”

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