Center Files Comment Supporting FTC Rule That Would Make Subscription Cancellation As Easy as Enrollment

July 7, 2023

Over the past several years and especially during the pandemic, companies have increasingly offered automatically renewing subscription-based services to their customers. After the initial subscription period (say, a year) for which the customer pays, the company automatically charges the customer for another term. These subscription services include an enormous range of businesses, from shopping sites like Amazon Prime, to entertainment streaming platforms like Netflix, to newspapers and apps and just about any other industry you can name.

Automatic subscription renewals can be convenient, but they can also be costly and manipulative. These renewals take the form of so-called “negative options,” agreements that interpret a buyer’s silence to indicate consent. While it is legal in principle for companies to use negative option techniques to sell products and services to consumers, these practices are prone to abuse and deception. For this reason, the recent proliferation of automatic renewal subscription services has raised significant concern among consumer advocates and government regulators. 

And with good reason. Sellers of subscription services regularly use deceptive strategies, known as dark patterns, to manipulate users. One clear example is the use of labyrinthian cancellation processes that trap consumers in their subscriptions or make cancellation so difficult that consumers begrudgingly keep their subscriptions. A recent study found that consumers pay on average $133 a month or $1,596 per year in subscriptions they no longer want but cannot cancel. 

To tackle abusive subscription services, this spring the Federal Trade Commission proposed a rule that amends its decades-old Negative Option Rule and is intended to protect consumers from deceptive negative option-based automatic renewals. The new proposed rule aims to prevent companies from using dark patterns to obtain consumers’ consent to subscription services and to ensure that companies provide simple cancellation processes. Specifically, the proposed rule requires that when a company uses a negative option subscription mechanism, it must make cancellation as simple as initial enrollment.

The Center—including Berkeley Law students Dylan Solomon ’25, Kavya Dasari ’23, Adam Pukier ’24, Eva Thomas ’25, and Bennett Williams ’25—submitted a comment supporting the FTC’s initiative to limit dark pattern use in negative options and to require simple cancellation. The comment gathers and explicates numerous concrete examples of subscription services in a wide variety of industries, from automotive to apparel, that use dark patterns to make cancellation nearly impossible for consumers. Further, the comment offers recommendations to strengthen the proposed rule, including by clarifying the requirements to show that a consumer has consented to a negative option agreement, and making it harder for companies to use dark patterns to hold on to customers who attempt to opt out of their subscriptions. 

The Center’s comment was not the only offering from Berkeley Law and its co-conspirators. Professor and Center Faculty Advisor Chris Hoofnagle, on whose comments the FTC initially relied to draft the proposed rule, submitted a separate comment supporting the proposed rule, as did a group of consumer law scholars convened by friends of the Center Professor Kaitlin Caruso of the University of Maine Law School and Professor Vijay Raghavan of Brooklyn Law School. 

The FTC rulemaking is not the Center’s only recent foray into the field of automatic renewals and negative options. Center Director Ted Mermin has served as an Observer on the Uniform Law Commission’s effort – now suspended pending the FTC rule – led by Reporter and friend of the Center Professor Prentiss Cox of the University of Minnesota Law School.

Update: The Center's staff attorney David Nahmias explained the breadth of deceptive practices used in many automatic renewals with The Hollywood Reporter in an article describing the impact of the FTC's proposed rule for streaming services.