Rep. Takano Reintroduces Unsubscribe Act to Protect Online Consumers
Washington, D.C. – Today, Rep. Mark Takano (D-Calif.) reintroduced 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. Senator Brian Schatz (D-HI) has introduced companion legislation in the Senate.
“We’ve all been there – we sign up for a free trial for a particular product and start getting charged monthly without a warning that the free trial has expired. And when we try to cancel the subscription, companies make the cancelation process a nightmare. This deceptive practice is wrong, and it should be prohibited,” said Rep. Mark Takano. “The Unsubscribe Act 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 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,” said Senator Schatz. “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.”
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.
The Federal Trade Commission has previously 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:
1. Requiring a straightforward cancellation process that mirrors the customer’s enrolling in a negative option billing agreement;
2. Requiring affirmative consent to bind consumers at the end of free-trial periods;
3. Requiring that consumers receive periodic notifications of all charges or changes to their accounts in free-trial conversion and automatic renewal plans.
The Unsubscribe Act has been endorsed by the Consumer Federation of America.
Dayanara Ramirez (202) 225-2305