A new “click-to-cancel” rule introduced in Congress earlier this month is reawakening a conversation about how best to protect consumers from falling victim to shady tactics by companies that offer subscriptions.
While this proposed legislation still has a long way to go before passing, it sheds light on how consumers may be overspending without realizing it.
The Unsubscribe Act was introduced in the House earlier this month in a bipartisan effort to tackle predatory subscription practices and as a companion to a Senate measure proposed in July.
The proposed bill would require companies to simplify subscription cancellation and implement rules and safeguards around free trials to protect consumers from overpaying or getting roped into subscriptions at the end of a free trial period.
This bill isn’t the first of its kind. Last year, the House and the Senate proposed similar legislation to reinstate the Federal Trade Commission’s click-to-cancel rule, which a federal appeals court blocked about a week before it was set to take effect.
The agency said in 2024 that it received more than 16,000 public comments about the proposed rule and also “nearly 70 consumer complaints per day on average, up from 42 per day in 2021.”
In November, consumer advocacy groups petitioned the FTC, calling for protection against “subscription traps,” referring to practices that “hook consumers into purchasing products or services with recurring charges and that are nearly impossible to cancel.”
While the latest bill is still in its early stages, around 20 states, including Pennsylvania, California, Colorado, and several others, have taken matters into their own hands by implementing their own click-to-cancel laws.
These laws require companies to provide clear disclosures and make cancelling subscriptions easy for customers by requiring that the cancellation method match the sign-up method, so customers don’t have to jump through several hoops to cancel their subscriptions.
“Click-to-cancel bills and rules require companies to make canceling subscriptions or recurring charges as easy as signing up, ideally with a single action,” said Danny Karon, a law professor and consumer protection attorney. “They target ‘negative option’ schemes, where you need to take action to unsubscribe from an otherwise ‘free subscription,’ thus stopping difficult cancellation schemes.”
“What ends up happening is people pay millions in unnecessary, undetectable, or impossible-to-cancel subscriptions, and this isn’t fair, so ‘click to cancel’ goes a long way toward righting a wrong for consumers,” he said. “It’s a positive impact on consumers’ finances, because if you’re paying more per month than you intend to, you have less to spend on what you need to.”
Also read: 7 ways to save money on a tight budget
While many Americans have swapped cable for streaming subscriptions to save money, rising subscription costs seem to be putting a dent in their budgets.
A recent study by CNET estimates that the average U.S. adult spends $1,080 per year on subscriptions, and nearly $200 on unused subscriptions. On average, subscribers reported spending $17 a month for subscriptions they don’t use, totaling more than $200 a year.
With many everyday costs surging due to inflation, it’s crucial to keep subscription costs in check.
Subscription costs can add up quickly, especially if you’re not carefully monitoring your monthly outgoings. You could be paying for a forgotten subscription or for a membership you never intended to keep past the trial period. Here are a few best practices to keep your subscriptions from taking over your budget.
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Set reminders before a free trial period ends. Some subscription providers may rely on the fact that users who sign up for a free trial often forget to cancel before it transitions to a paid subscription. This is why it’s important to take matters into your own hands and set a calendar reminder to cancel any subscriptions you don’t plan to use before you’re charged.
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If you’re on the fence about keeping a subscription, see if you can get a longer trial period or discount. Say you’ve signed up for a subscription and you’re still not sure you want to keep it long term. Many companies will offer you an additional trial period or a discounted membership to keep you as a customer. This won’t last forever, but it can buy you some time to decide whether to keep a service without paying full price.
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Review your subscriptions periodically. Be honest with yourself about which ones you actually use and which you can afford to cut. This will change over time, so it’s important to have frequent and honest check-ins to keep your budget in line and avoid unnecessary spending.
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Don’t be afraid to outsource. There are several platforms on the market, such as Rocket Money, Trim, and PocketGuard, that you can use to help comb through your monthly expenses, spot ghost subscriptions, and weed out what you no longer need.
Read more: 5 ways AI can help you accomplish your money-saving New Year’s resolutions
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