The FTC Might Make It Really Easy to Cancel Gym Memberships

First, they came for junk fees. Now, the government is targeting memberships that are hard to cancel. On Thursday the Federal Trade Commission (FTC) proposed a “click to cancel” provision requiring companies selling memberships (such as gyms), subscriptions or anything with recurring payments to make it as easy as possible for consumers to cancel. Their goal? Making it as easy to cancel as it was to sign-up.

“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” says FTC Chair Lina M. Khan. “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”

Biden Administration Wants to Scrap Airline and Hotel Junk Fees

Hotel guests paid billions in hotel fees and surcharges back in 2018

The new rules are part of a review of the 1973 Negative Option Rule, which the agency uses to combat unfair or deceptive practices related to subscriptions, memberships and other recurring-payment programs. Among the issues the FTC is targeting: Merchants who “fail to make adequate disclosures, bill consumers without their consent, or make cancellation either difficult or impossible — such as by requiring customers to cancel in person or keeping them stuck on hold waiting to talk to customer service.”

The biggest change would force sellers to simplify the cancellation process (e.g. if you can sign up for a service online, you must be able to cancel on the same website in the same number of steps). Other rules include limits around merchants making additional offers during the cancellation process and offering reminders about upcoming annual payments or renewals.

As NPR notes, many gyms require members to cancel in person or via certified or notarized mail, while other companies (like cell phone or cable providers) often allow you to sign up online but only cancel by talking to a customer service representative, who, in my experience (hi, Optimum), will try to upsell as you leave.

The Commission voted 3-1 to approve the publication of the proposed rulemaking in the Federal Register; once the notice has been published, consumers can submit comments electronically. If this comes to pass, violators could be subject to fines up to $50,000 per day.