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Rule is part of Biden administration's bid to tackle 'junk

fees'

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FTC has received increasing complaints about subscriptions

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Harris highlighted the rule in campaign platform

By Jody Godoy

Oct 16 (Reuters) - The U.S. Federal Trade Commission

adopted a final rule on Wednesday requiring businesses to make

it as easy to cancel subscriptions and memberships as it is to

sign up, in the agency's last major rulemaking before the Nov. 5

election.

The "click to cancel" rule requires retailers, gyms and

other businesses to get consumers' consent for subscriptions,

auto-renewals and free trials that convert to paid memberships.

The cancellation method must be "at least as easy to use" as the

sign up process.

FTC Chair Lina Khan said in an interview that the rule is an

overdue response to a rising number of consumer complaints about

situations in which it is "extraordinarily easy to sign up for a

subscription, but absurdly difficult to cancel."

"Companies shouldn't be able to trick you into paying for

subscriptions that you don't want," Khan said.

The rule prohibits requiring consumers who signed up through

an app or a website to go through a chat bot or agent to cancel.

For in-person signups, companies must provide means to cancel by

phone or online.

"The pandemic brought to the surface just how businesses are

making people jump through endless hoops," Khan said. Requiring

in-person cancellations while the businesses themselves were

closed "really highlighted the absurdity of these practices,"

she said.

After proposing the rule last year, the FTC received

thousands of comments from consumers who had trouble canceling

services, and advocates who criticized practices at gym chain

Planet Fitness ( PLNT ), meal kit company HelloFresh, Rihanna's

Savage X Fenty lingerie shop, and others.

Existing laws such as the Restore Online Shoppers'

Confidence Act of 2010, which the FTC used to sue Amazon ( AMZN )

over its Prime service cancellation practices, leave

gaps, the FTC said.

Trade groups representing car washes, retailers, news

publishers, TV providers and other businesses had called parts

of the proposal burdensome and unnecessary.

The FTC dropped proposals that businesses periodically

remind consumers about recurring charges, and let consumers

trying to cancel a service opt out of seeing discounts and other

last-ditch efforts to keep them.

The rule passed 3-2, with the FTC's two Republican

commissioners voting against it.

Three weeks before Election Day, the rule is among the final

pieces of U.S. President Joe Biden's broad effort to tackle

"junk fees."

Vice President Kamala Harris, the Democratic candidate for

the White House, highlighted the "click to cancel" proposal last

month as an example of the issues she will prioritize if

elected.

Khan would not comment on whether she has discussed a role

in a potential Harris administration, nor on remarks by some

billionaire supporters of Harris who have said Khan should be

replaced.

"People just want an economy that's fair and honest. That's

what our focus is," she said.