FTC's quixotic quest to fix CX with Click to Cancel rule
The Biden administration strives to improve CX with a rule that goes in effect in 180 days. What could possibly go wrong? People, process, tech and a U.S. election.
Whomever could untie the massive Gordian knot connecting an ox and cart, Greek legend has it, would rule all of Asia.
Likewise, whomever can untangle the morass of people, process and technology to make unsubscribing to services as easy as it is to sign up will get their organizations in compliance with an upcoming U.S. Federal Trade Commission (FTC) regulation nicknamed Click to Cancel.
The rule spans the simplest consumer subscriptions all the way to complex B2B transactions. After reviewing more than 16,000 comments collected from consumers, businesses and trade associations, the FTC released the final version of Click to Cancel last week, set to go into effect in next April. Civil penalties can be levied against companies found to be out of compliance.
But between here and compliance, there are some potential bumps in the road. None is bigger than a bitterly fought presidential election -- although past initiatives to streamline customer service on the consumer side, such as holding airlines accountable for treatment of consumers and improving IRS response times, have garnered bipartisan support. One would assume if Kamala Harris wins, she would continue her predecessor's policy; Donald Trump is a wild card and could, in theory, challenge enforcement of the regulation through budget controls, not defending legal challenges, or appointing a new FTC commissioner.
Contact centers need compliance plans
Perhaps a bigger problem to solve is the execution of the Click to Cancel's simple idea: Make it as easy to cancel a subscription as it was to sign up.
Take the idea of one-click cancellation in an app. It's easy when it's a small business in town, but if your business is a franchise model, such as fitness centers, it's a lot harder.
That doesn't leave the fitness centers off the hook. Many consumers complained about the difficulties of cancelling gym memberships, including one who said theirs required a certified letter to the company's home office and another saying they were "roped into" paying for subscriptions longer than they wanted. Another explained that it took 20 minutes to sign up on an iPad but hours to get out of.
Telecommunications providers also found themselves the targets of consumer complaints so numerous that the Federal Communications Commission is contemplating its own Click to Cancel regulations in addition to the FTC's.
The FTC Click to Cancel rule aims to make signup and cancel experience take the same amount of time. A proposed version of the rule earlier this year suggested that companies must answer all cancellation calls during normal business hours and not erect barriers to cancellation, such as long hold times. The final rule allows customers to leave recorded voice messages to cancel subscriptions provided they fulfill the cancellation request promptly.
Both B2C and B2B companies will need compliance plans. In B2B deals, buying teams often buy from selling teams, complicating cancellations to the point where Planet Fitness's problems look more like tying shoes than a Gordian knot.
"B2B agreements are often complex, involving multiple decision-makers and points of contact, who might rotate or leave their roles over the course of a contract," data broker ZoomInfo said in its public comment on the rule.
Sign-ups that aren't one click in an app or on a website will likely involve a phone call to cancel. Many commenters on the interim draft rule earlier this year from the business side said phone calls make cancellations more straightforward because it's easier to verify a caller's identity on that channel.
It gets even more complicated, said Rebecca Jones, president of Mosaicx, a conversational AI tech vendor and consultancy. Some companies may have to address Click to Cancel compliance by changing their customer data structure. But compliance is much more feasible with today's technology than when she worked at Citigroup during the 1990s and 2000s.
"This would have been completely overwhelming [back then] and very difficult for them to come into compliance with because of the lack of automation technologies that we have today," Jones said. "Given the advancements of ML, AI [and] natural language processing, I think that it is much easier for companies to consider how they [can] apply these technologies between the consumer experience and their companies in order to enhance that experience and also to stay in compliance with these regulatory changes that are happening quickly."
Still, Jones said, the larger the organization, the harder it will be to get into compliance with Click to Cancel. That goes double for those with aging IT infrastructure. She believes AI paired with solid customer routing systems that get the customers talking to the right human agents, quickly, when the case can't be handled with self-service will be foundational to compliance.
Digital economy's unfair advantage
Click to Cancel arose from an FTC update of the 1973 Negative Option Rule, which aimed to prevent consumers from getting ensnared in unfair or deceptive practices related to subscriptions, memberships and other recurring-payment programs. The digital economy, FTC chair Lina M. Khan said, is rife with "tricks and traps" that make consumers pay for subscriptions they no longer want.
Lina M. Khan
There is no doubt that consumers and businesses could use some help in managing their subscriptions and getting them canceled in good time. The "negative option," however simple as it looks, will take some time to implement for a lot of companies.
The bottom line, however, is that companies are taking advantage of their customers when they make it harder to cancel a subscription than it is to sign up in the digital era. That problem has been getting worse. In 2021, the FTC said it averaged 42 complaints per day about cancellation difficulties. In 2024 so far, it's been 70 per day.
This rule remakes marketing, consent, disclosure and recordkeeping requirements when customers ask for cancellations. For many companies, this will require a thoughtful review of cancellation processes, the tech to support it, and -- if it's part of the company culture -- deep introspection on whether last-gasp sales and marketing pitches impede the cancellation process.
Companies that take pains to make cancelling easy, such as streaming video providers Netflix and Hulu, or gyms like the YMCA, likely have the infrastructure in place to comply with Click to Cancel.
The rule truly represents common sense and decency. But if you're like some of the fitness centers or telecommunications companies drawing fire from consumers, your customer service team may have a Gordian knot to untie.
Don Fluckinger is a senior news writer for TechTarget Editorial. He covers customer experience, digital experience management and end-user computing. Got a tip? Email him.
