CFPB To Enforce New FTC "Click-to-Cancel" Rule

CFPB Director Rohit Chopra warned consumer financial firms and other covered entities that the CFPB will enforce the new FTC "Click-to-Cancel" Rule, which simplifies cancellation of subscriptions and memberships.

In a statement, the Director highlighted growing consumer challenges with subscription-based and membership services, including companies deliberately making it difficult to cancel recurring payments, unexpected charges and financial firms being burdened with dispute resolution due to negative option marketing practices. The "Click-to-Cancel" rule, which amended the FTC's previous "Negative Option Rule," requires businesses to clearly disclose terms, obtain informed consent and offer straightforward cancellation methods. (See Fact Sheet.)

Mr. Chopra said the CFPB is committed to enforcing these new standards and called on financial firms to enhance their practices. He added that some financial firms allow consumers to block certain recurring charges on credit cards, which he said was "helpful," but that the rule requires that consumers can cancel subscriptions and memberships directly through the company. He urged private payment network operators to review their own rules and standards regarding recurring payments and charges.