“Alarming FTC Proposal: Easier Cancellation of Recurring Memberships and Subscriptions”

“Alarming FTC Proposal: Easier Cancellation of Recurring Memberships and Subscriptions”

Health Club News, a source of current gym news for owners and managers , recently reported on a proposed rule provision by the Federal Trade Commission (FTC) that would change the way recurring memberships can be canceled. According to the FTC’s announcement on March 23, the new click-to-cancel provision would require companies to allow consumers to cancel recurring memberships and subscriptions in the same way that they signed up for them.

The new provision, along with other proposals, would mean consumers could more easily cancel unwanted membership and subscription payment plans. FTC Chair Lina M. Khan said, “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”

However, IHRSA, the trade association and lobbying group for commercial health clubs, is speaking out against the proposal. According to a statement by IHRSA President and CEO Liz Clark, the proposed rule demonstrates a fundamental misunderstanding of the brick-and-mortar gym and studio business model. Clark said that gyms, studios, and related providers help more than 60 million Americans improve their physical and mental health, typically through in-person exercise, classes, and services.

The proposed rule would require businesses to make it at least as easy to cancel a subscription as it was to start it. It would also allow companies to pitch additional offers or modifications when a consumer tries to cancel their enrollment, but only after the seller first asks consumers whether they want to hear them. The proposed rule would require sellers to provide an annual reminder to consumers enrolled in negative option programs involving anything other than physical goods, before they are automatically renewed.

Once the notice has been published in the Federal Register, consumers can submit comments electronically. The public also may submit comments in writing by following the instructions in the “Supplementary Information” section of the Federal Register notice. Health Club News encourages gym owners and managers to stay informed on this and other industry news to best serve their customers.