What The 'Click To Cancel' Rule Means For You & Your Wallet

In the past, Money Digest has cautioned that using autopay for subscriptions can cost you. Indeed, forgetting to cancel an unwanted (or forgotten) subscription or membership can take a wrecking ball to your finances and unfortunately, occurs way too often. Per a 2022 study by C+R Research, 42% of Americans admit to continuing to pay for a subscription they no longer use. In total, Americans are spending an average of $219 per month on subscriptions, which is approximately $133 per month more than those same consumers thought they were paying when asked.

At the same time, if you've ever tried to cancel a streaming membership, software subscription, insurance, or dozens of other programs with recurring payments, you know that the provider doesn't make it easy. As it turns out, that's a feature, not a bug. Businesses deliberately want to make it difficult for customers to leave.

In recent (August 12) comments to the press, White House domestic policy adviser Neera Tanden said, "Essentially in all of these practices, companies are delaying services to you or really trying to make it so difficult for you to cancel the service that they get to hold onto your money for longer and longer." If a consortium of U.S. government agencies has its way, such behavior will not no longer be tolerated. Dubbed "Time is Money," a set of new regulations will make it easier for consumers to cancel everything, from online newspaper subscriptions to gym memberships.

Perhaps the most frustrating technique to discourage cancellations is a requirement to do so by telephone. That is, while some services were easily set up with a few mouse clicks or taps on your smartphone's screen, they somehow require an old-fashioned phone call to end the relationship. Predictably, customers are required to navigate a complex set of menu options and endure long, automated messages before being allowed to speak to a real live human to actually cancel.

Now, the Consumer Financial Protection Bureau wants to put an end to these telephone practices intended to make callers give up and perhaps hang up before being able to cancel. If enacted, a new rule will make sure that consumers can reach a live person by pressing just one button rather than enduring a complicated phone tree.

Per the Biden administration, the Federal Communications Commission is considering similar requirements for businesses that fall under its supervision, like internet, phone, and cable companies. This isn't the first time that the FCC has attempted to simplify canceling services. In March 2023, a "click to cancel" policy was introduced to streamline a convoluted cancellation process. It's unclear whether the agency's latest potential requirements are new or simply a greater enforcement of the 2023 rulemaking.

In a coordinated effort between agencies, government officials from the Department of Health and Human Services and the Department of Labor called on health insurance companies to "take concrete actions to save people time and money when interacting with their health coverage." As well, health insurance providers to federal and postal service employees will be requested to simplify the online process for making out-of-network claims.

The effectiveness of such requirements and whether or not they'll be abided by remains to be seen, however, these "Time is Money" measures are building on an already brisk momentum for increased consumer advocacy. For example, attempting to reduce hidden fees, which are frequently levied on concert tickets, hotel rooms, and cellphone bills (which should always be scrutinized, by the way). Airlines have also come under recent scrutiny for their own sneaky and/or excessive fees for things like baggage or changing or canceling a flight. At the same time, airlines could also be required to reimburse victims of excessively late or canceled flights.

To be fair, not everyone is a fan of the largesse toward consumers at the expense of companies. As reported by ABC News, for example, Sean Heather, a senior vice president at the U.S. Chamber of Commerce, criticized the new "Time is Money" initiatives, saying that they were "nothing more than an attempt to micromanage businesses' pricing structures, often undermining businesses' ability to give consumers options at different price points."