The Federal Trade Commission is fast becoming a living case study in ideological overreach. Undaunted by a string of embarrassing court losses and plummeting morale among career staffers, the agency keeps grasping at the most slender reeds of legal theories and imagined consumer harms in its desperate effort to expand the administrative state’s reach into every corner of the American economy, from car dealerships to video games to cancer research to, yes, even “Big Sandwich.”
Next up on the Commission’s anti-market agenda: a new proposal to save American consumers from the dreaded horrors of subscription-based business models. The Commission is considering new “click-to-cancel” rules that aim to micromanage how any company offering recurring subscriptions must structure their online cancelation flows.
The FTC’s rules would effectively prohibit companies from offering consumers the choice of discounts or special promotions as an alternative to fully canceling a subscription service. Would an unhappy Netflix consumer opt to keep their subscription active if offered a steep price cut? Maybe, maybe not. But the hall monitors at the FTC seem set on making sure we don’t even get that choice.
Limiting consumers’ choices – at the precise point where they have maximum leverage to extract a better deal from a service provider – seems an odd approach to “consumer protection.” But it fits well with the Commission’s recent pattern of excess, where sweeping authority is a policy goal unto itself.
To be fair, there’s a small kernel of a reasonable idea buried in what the FTC is considering. The digital economy has birthed plenty of bad actors such as weight-loss websites and celebrity-backed fashion scams, whose business models seem to hinge on gaming consumers into buying subscriptions they don’t actually want, then making it as inconvenient as possible to cancel.
Ironically, local newspapers – those hallowed “Protectors of Democracy” – are among the worst offenders. Agreeing to a free trial to access that one interesting, paywalled article gets the hook in. Then comes the inevitable forgetting about signing up, only to learn the hard way that canceling involves navigating a gauntlet of impenetrable telephone “help” menus via a call center only open for limited hours.
What was initially pitched as an effort to stamp out these obvious bad-faith tactics has unfortunately morphed into a much more sweeping proposal that seems to view all subscription-based services as inherently deceptive. The Commission’s proposed rules fail to make the obvious distinction between purchases that could just as easily (and preferably, from consumers’ perspective) be offered as one-time options, and those that are quite obviously intended to be recurring, long-term services.
Some in Congress back the FTC’s vision, arguing the rules will help police services that consumers “did not intend to subscribe to” or “simply forgot about subscribing to.” That may aptly describe fly-by-night apps that lure in customers with short-term, free-trial offers. But when’s the last time you heard of anyone “accidentally” signing up for home internet service, or “forgetting” that they’re enrolled in a monthly cell phone service plan?
Not every subscription-based business model is created equal, and consumers’ expectations vary widely. The FTC’s approach should be just as flexible and nuanced – especially when dealing with industry sectors already covered by a thicket of additional consumer protection requirements administered by competing federal agencies.
Clear transparency requirements make sense across the board. No business should be allowed to enroll a customer in a recurring plan without full consent, after clearly disclosing the costs, the timeline for recurring payments, and the process for canceling. But that’s already the law today, and enforcement agencies hardly need a massive expansion of their powers to effectively police violations.
The FTC’s proposal goes well beyond reasonable, to the point of counting precisely how many mouse clicks a user might need to navigate companies’ websites. Anyone credulously predicting these rules will somehow reduce consumer confusion and frustration has clearly never interacted with a government website. “Web design by a committee of compliance lawyers” may do wonders for FTC staffers’ future employment prospects, but it’s hardly the digital future most consumers want.
Based on its recent track record, no one should be surprised to see the FTC prioritizing ideological, anti-business axe-grinding above the genuine interests of consumers. There are plenty commonsense ways to protect consumers from bad actors without taking a sledgehammer to every subscription-based business in the digital economy.
Bartlett Cleland is the Executive Director of the Innovation Economy Alliance, an organization dedicated to educating about and creating a public policy environment that understands the innovation ecosystem, that accepts and enables dynamic creation, invention, expression and experimentation.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.