Today we’ve started a petition to the Federal Trade Commission (FTC) to empower American consumers to cancel unwanted recurring payments easily.
Since starting Trim, we’ve seen companies make it harder and harder for users to cancel their subscriptions. We’re doing our best to help consumers fight back – but we’ve come to believe that the FTC has a part to play, too.
The number of subscription services has exploded in the past few years. Big corporations have figured out that consumers are creatures of the status quo, and doing nothing is a lot easier than stressing about your personal finances. With the rise of electronic payments, it’s easier than ever to sign up for something and forget about it.
You may be thinking: How can this really be a problem? Isn’t the amount of money at stake de minimus?
That’s certainly true for some high-income households: a $15/month subscription might be easy to ignored. But for others, $180 per year is real money.
And think about the collective impact. If every household in America is paying $15 per month more than they should on some dorky recurring payments – that’s north of $18,000,000,000 per year across the whole country.
We’re not calling for any kind of extreme regulation here. At Trim we rely on subscription services such as GitHub and AWS to keep our business running! The convenience of auto-billing is a godsend for busy entrepreneurs.
But at the same time, we’ve seen that some actors take it too far, imposing draconian requirements on users who want to cancel. For example, Blue Apron doesn’t have an easy way to cancel from inside your account. You have to Google around to find their email address – and then email them, just to cancel!
Let it be known: I use Blue Apron and the service can be great. But I’ve also forgotten to unsubscribe for a week that I was out of town, and been billed for food that I never ate. The FTC should put a word in with merchants like Blue Apron to remember that customers come first if you’re trying to build a business for the long run.
Examples abound, most far less useful than delicious dinner ingredients. Several of the credit monitoring services require a phone call with a lengthy wait time in order to cancel a monthly subscription. (Not to mention that these credit reports and credit monitoring service are available for free elsewhere!)
So what can be done? Two sets of regulations govern recurring billing: federal and state.
The best example of federal regulation is the Restore Online Shoppers’ Confidence Act (ROSCA), passed by Congress in 2011.
The FTC has used this law in the past to stop unscrupulous billing practices. For example:
+ In 2011, the FTC charged a group of marketers for billing consumers without their consent.
+ In 2015, the FTC filed a lawsuit against DirecTV, alleging that they offered premium channels on a “trial” basis and then charged customers for those channels after the trial period without getting their consent. (Law360)
On a state-by-state basis, lawmakers have also passed legislation to make sure consumers are protected. The best example is in California, where the law “prohibits retailers from charging consumers’ credit card, debit card or bank account for ongoing orders without their explicit consent.” (Law360)
So let’s make sure that subscription billers do the right thing. Call on the FTC to keep a close eye on recurring billers. You can read and sign the petition here:
FTC: Enable Consumers to Cancel Recurring Payments Easily (Change.org Petition)