Rep. Takano Introduces Unsubscribe Act to Protect Online Consumers
Washington, D.C. – Today, Rep. Mark Takano (D-Calif.) introduced the Unsubscribe Act to protect consumers from being tricked into paying monthly membership fees without their explicit consent. The bill directly addresses the business tactic of negative option billing, which allows a customer’s inaction to serve as approval to be charged for goods or services.
Online companies typically leverage negative option billing by enticing consumers with a one-time offer that turns into a monthly subscription unless the consumer takes action. In some cases, the cancellation process can be designed to frustrate consumers’ attempts to terminate the subscription.
“Through negative option billing, companies take millions of dollars every year from consumers who are not aware they are being charged or unable to navigate an intentionally complex cancellation process,” said Rep. Takano. “This bill gives power back to consumers by forcing companies to get their explicit permission before charging them, allowing consumers to cancel a service through a straightforward process, and ensuring companies are transparent about their cost and cancellation policies.”
The Federal Trade Commission has penalized companies for duping consumers through negative option billing, including a $20 million fine of a credit monitoring company that used the lure of free credit reports to trap consumers into a costly membership. The Unsubscribe Act would strengthen consumer protection in three ways:
- It requires that all businesses provide a cancellation mechanism that mirrors the customers’ method of enrollment. If you can subscribe to a service with a click, you should be able to cancel it with a click.
- It requires that – in addition to receiving affirmed consent from the customer at the onset of the negative option deal – the seller must receive an additional consent at the end of the trial period before any new payment is collected.
- It requires that consumers receive periodic notification of all obligations and changes to their contracts. Proactively reminding buyers of recurring charges, reenrollment details, and agreement changes will help decrypt the complex nature of negative option agreements.
The Unsubscribe Act is cosponsored by Rep. Sanford Bishop.
Full text of the bill is available here.
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