Statement of CFPB Director Rohit Chopra on the FTC’s Click‑to‑Cancel Rule

Like with many other products and services across the economy, consumers are finding that financial products and services are now being marketed through “subscriptions” and “membership” arrangements. The Consumer Financial Protection Bureau (CFPB) has observed that these revenue models create incentives for firms to make it difficult to cancel recurring payments and charges. Relatedly, the CFPB has found that difficulties in cancellation of products and services across the economy has led consumers to file disputes with banks and other financial firms offering credit cards or transaction accounts.

The Federal Trade Commission (FTC) recently finalized an important rule that will make it easier for consumers to cancel unwanted subscriptions and memberships. This “Click-to-Cancel” Rule updates the FTC’s existing Negative Option Rule and helps ensure that our nation’s consumer protection laws keep pace with the modern digital economy. The CFPB can enforce the new Click-to-Cancel Rule, which will further enable the CFPB to protect consumers from being tricked into paying for products or services they do not want or need.

The CFPB has received numerous complaints from consumers about negative option marketing, who feel that their financial institutions are trying to trap them into deals that they do not want.¹ In these complaints, we see allegations of several concerning practices. Consumers complain about being repeatedly charged for services they did not mean to purchase or do not use. Some allege that they were signed up for subscriptions without understanding the programs or their costs. Consumers also complain about the difficulty of canceling subscriptions and about charges made to their credit card or bank account after they tried to cancel.

The FTC’s Click-to-Cancel Rule establishes clear and common-sense requirements that sellers must follow when using negative option marketing. Under the new rule, sellers using negative option programs must, among other things, provide all important information to consumers, obtain their informed consent before charging them, and provide a simple method to cancel the product or service. The CFPB will take action against consumer financial firms and other covered entities that violate the Click-to-Cancel Rule.

The CFPB also notes that some financial firms offering credit cards are giving consumers the ability to block certain recurring payments. Consumers may find this service helpful. However, it is important that consumers can cancel subscriptions and memberships directly through the company initiating the recurring charges. The CFPB encourages private payment network operators to review their own rules and standards regarding recurring payments and charges. This may help to reduce harms from negative option marketing and reduce overall consumer disputes.