March 30, 2023
Today, U.S. Senator Chris Van Hollen (D-Md.) and Congresswoman Yvette D. Clarke (D-N.Y.-09) introduced the Consumer Online Payment Transparency and Integrity (Consumer OPT-IN) Act, bicameral legislation to protect consumers from online free trial scams and hard-to-cancel recurring-payment programs. The lawmakers’ bill puts the onus on companies, not consumers, when it comes to extending subscriptions and memberships, including requiring a shift from “opt-out” conditions to “opt-in.” This legislation complements the Federal Trade Commission’s (FTC) recently proposed “click to cancel” rule to make it easier for consumers to get out of unwanted subscriptions. The lawmakers were joined in introducing this legislation by Senators Jack Reed (D-R.I.), Ben Ray Luján (D-N.M.), Richard Blumenthal (D-Conn.), and Ron Wyden (D-Ore.).
“While companies have made it easier than ever to sign up for subscription-based services, they have also come up with deceptive ways to make it harder than ever to get out of them. Our Consumer OPT-IN Act puts Americans back in control by requiring companies to provide clear options to their customers – and ensure they know what they’re signing up for,” said Senator Van Hollen.
“For too long and far too frequently, subscription-based services have trapped consumers into paying for services without their clear consent. I am proud to introduce the important Consumer OPT-IN Act alongside Senator Van Hollen to protect the American people from dishonest business practices and provide much-needed transparency and accountability in this space,” said Rep. Clarke.
“This legislation will make it easier for consumers to cancel ongoing subscriptions they no longer want. It will save them real money by simplifying the process for ending ‘free trials’ or unwanted subscriptions. The process of enrolling and cancelling should be equally simple. This bill will get rid of needless cancellation hurdles, hold corporations accountable, and save consumers time, money, and peace of mind,” said Senator Reed.
“We’ve all seen these types of ‘deals.’ Companies offer you a free-trial and then make it nearly impossible to cancel, or keep charging you subscription fees in the hopes that you will forget. Transparency between companies and consumers is badly needed,” said Senator Luján. “That’s why I’m proud to join Senator Van Hollen and Congresswoman Clarke to expand transparency and protect vulnerable Americans from unwarranted charges.”
“Consumers need protection against free trial subscription scams. They deserve refunds when they’re lured into no cost introductory offers and then trapped by a high cost subscription they can’t reject. Our legislation says they shouldn’t be charged unless they explicitly request the subscription—simple fairness and common sense,” said Senator Blumenthal.
“I have long supported efforts to increase transparency so Oregonians and consumers across the nation are not harmed by unexpected charges from companies using deceptive marketing practices and zombie fees to goose profits,” said Senator Wyden. “As subscription services continue to grow, Congress and the administration ought to work together to simplify renewal and unsubscribe processes in order to build trust between customers and businesses.”
Too often, companies use free trial offers and unclear terms and conditions to trap consumers into subscriptions. From 2017-2019, the Better Business Bureau received 58,400 complaints related to free trials scams. Additionally, companies often use software and interfaces that subtly trick users, called dark patterns, making it harder for consumers to end these subscriptions and stop unwanted charges. To better protect and inform consumers, the Consumer OPT-IN Act would limit the use of deceptive tactics and impose stricter notification requirements on companies. This legislation would help advance President Biden’s initiative to combat “junk fees,” meaningless charges that companies impose on consumers to pad their profits.
The Consumer OPT-IN Act will protect consumers from deceptive free trials and marketing tactics by:
- Requiring companies to get express informed consent from consumers before converting free trials into automatically renewing contracts and charging consumers;
- Requiring companies to notify consumers of the first automatic renewal and obtain express informed consent from consumers before automatically renewing long term contracts;
- Requiring that companies offering contracts that automatically renew on a short-term basis get express informed consent from consumers annually;
- Requiring companies that have knowledge that a consumer isn’t using their products or service for 6 months to get the consumer’s express informed consent to continue billing, and allowing consumers to request a refund for the remaining portion of the contract;
- Providing consumers with refunds when violations occur;
- Giving the FTC rulemaking authority over negative option contracts, automatic renewals, and dark patterns.
The legislation was initially introduced by Van Hollen and Clarke in December 2021. Bill text is available here.
This legislation is endorsed by Public Citizen, National Consumer Law Center, Public Interest Research Group’s (PIRG) Federal Consumer Program, and Consumer Action.
“We support Sen. Van Hollen’s and Rep. Clarke’s commonsense bill,” said Lisa Gilbert, Executive Vice President of Public Citizen. “When the pitch says, ‘The first month is free,’ it can’t whisper ‘But we’re not telling you how to cancel.’ Firms must be clear about exactly when and how a consumer can stop unwanted payments.”
“Sen. Van Hollen’s and Rep. Clarke’s bill will make sure that companies don’t trick people into paying fees for membership clubs or online renewal fees for services they do not want. My 89-year old mother found herself paying hundreds of dollars a year in junk fees for various ‘free shipping’ ad discount clubs that she had no idea she joined and did not want. Sen. Van Hollen’s bill will put a stop to those abuses,” said Lauren Saunders, Associate Director of the National Consumer Law Center.
“Too many online subscription renewals are like the Hotel California or even a roach motel. You can enter but you can never leave. Senator Van Hollen’s and Rep. Clarke’s Consumer OPT-IN Act requires companies to make cancelling as easy as signing up,” said Emily Scarr, Maryland PIRG Director.
“Senator Van Hollen’s and Rep. Clarke’s OPT-IN Act puts the power back in consumers’ hands to decide if they want to do business with a company once a free trial expires,” says Ruth Susswein, Consumer Action’s Director of Consumer Protection. “This legislation would end unwanted, misleading contract renewals that consumers are duped into.”