The fight over "click to cancel" isn't over
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Illustration: Aïda Amer/Axios
You can subscribe to almost anything with just a click these days — wine clubs, pet food, therapy, underwear, the list is endless.
- Unsubscribing? That's tougher.
Why it matters: The difficulty of unsubscribing — finding out where and how to do it, calling customer service, navigating last-chance promotional offers — costs people time and money.
- It's a boon for the many firms that see a revenue boost from keeping people on the monthly hook.
- A federal court just handed those firms a huge win.
State of play: Last week a federal appeals court blocked a Federal Trade Commission rule that was meant to change the process.
- The so-called Click to Cancel rule was set to take effect on Monday, and would've have required companies to make it as easy to cancel a subscription as it is to sign up for one.
Catch up quick: A three-judge panel at the Eighth Circuit Court of Appeals ruled that the FTC made a procedural error in promulgating the rule.
- As a result businesses didn't get enough "substantive consideration" in the rule-making process, said the judges — two Trump appointees and one judge appointed by George H.W. Bush.
Former FTC chair Lina Khan blasted the decision in an interview with Axios last Thursday.
- "We were exhaustive in our rulemaking process," she said, noting it took over two years. "We reviewed over 16,000 comments. Industry asked for hearings, so we gave them further opportunity to weigh in and share their views."
- "The idea that, as the Court suggested, that somehow industry didn't have enough opportunity to comment and weigh in strikes me as fairly ludicrous."
The other side: Companies that rely on subscription revenue celebrated. The Health & Fitness Association, which represents gyms and was a party to the suit, thanked the court in a statement.
- Gyms have long been the poster child for making it hard to cancel a membership.
For the record: The FTC hasn't commented on the Click to Cancel ruling, and didn't respond to Axios' request for comment.
The big picture: The subscription economy has seen big growth over the past decade — one study estimated 400% growth — as companies have come up with new ways to keep customers paying their monthly bills.
- There are now services that help consumers find and cancel subscriptions. Guess how they work? Yep, you subscribe to them.
By the numbers: In a recent study, economists at Stanford University signed up for subscriptions at 47 newspapers and tried to cancel them.
- Though every paper allowed online signup, 26 required you to cancel by phone, a process that took more than ten minutes at seven outlets.
- 16 of the 21 papers that allowed for online cancellation bogged the process down with "sludge," surveys that asked why they were canceling or promotional offers that had to be clicked through, etc.
- In a separate paper, economists found that adding friction to the unsubscribe process raises revenues for companies anywhere between 14% to more than 200%.
What they're saying: "People are paying for many months of subscriptions that they no longer value. That allows companies that don't perhaps have a viable business model to continue bringing in money," said Stanford economist Neale Mahoney, who co-authored those papers.
What's next: The FTC has three options here — it could appeal the ruling, start a new process to correct the procedural mistake the court flagged, or walk away.
- Congress could also step in. On Thursday, Sen. Ruben Gallego (D-Ariz.) introduced a bill that would codify Click to Cancel.
- And a bipartisan group of senators are planning to reintroduce a bill that would require companies to be more transparent about subscriptions, according to a press release seen by Axios.
The bottom line: Unsubscribing is hard — and getting companies to make it easier is also proving difficult.
