Canceling a subscription is about to become less painful for millions of New Yorkers.
New York City will become the first municipality in the country with its own click-to-cancel rule when new consumer protections take effect Oct. 1.
The rule requires companies to offer a straightforward cancellation process in the same method customers used to sign up, so if a customer subscribes for a service online, it must be just as easy to cancel the subscription online.
Streaming services, gym memberships and service contracts have long made signing up quick and simple, while canceling can require navigating confusing or time-consuming steps.
"It's like the 'Hotel California.' You can check in anytime you like, but you can never leave and that's the way that companies have treated a lot these subscriptions," explained Teresa Murray, consumer watchdog director at the Public Interest Research Group (PIRG).
Several states have already passed click-to-cancel laws or similar protections targeting those practices. Now New York City is joining them.
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Under the new rule, companies must clearly explain subscription terms and disclose consumers' rights when they sign up or cancel. Additionally, companies cannot charge shipping costs for items consumers originally received for free.
Brad Lipton, director of corporate power and financial regulation at the Roosevelt Institute, said the rule could save New Yorkers hundreds of thousands of hours and at least $21.5 million per year.
"This rule would really make it a lot easier for people to only have subscriptions that they want," Lipton said.
He added that the rule also creates a fairer market by removing deceptive hurdles.
"If a firm knows that it's hard for their customers to cancel, they have less of an incentive to keep them happy," Lipton said. "Similarly, if it's hard to cancel a subscription, it makes it hard for other firms who maybe want to offer good quality or price services but have trouble luring customers in because people are already signed up for subscriptions somewhere else."
A nationwide click-to-cancel rule was supposed to take effect last year, but a federal appeals court blocked it over procedural issues. The Federal Trade Commission is working on revised regulations for uniform rules across the country.
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In New York City, businesses that violate the click-to-cancel rule could be liable for civil penalties, starting at $525, and may be liable for refunding the consumer.
Consumers who don't live in a state or city with a click-to-cancel law still have some options. Because companies were preparing for the federal rule last year, some have already made canceling easier.
Apps like Rocket Money can also help identify — and sometimes cancel — services consumers no longer use.
