Pa. House passes ‘click-to-cancel’ subscription bills as court throws out federal rule
HARRISBURG (TNS) — The state House has passed a pair of bills aimed at tamping down on dubious subscription services — just as a federal court moved to throw out similar rules proposed by federal regulators.
Earlier this month, the House approved a bill cracking down on so-called “negative option” agreements in which consumers are automatically enrolled in a service unless they opt out. This week, the chamber also cleared a second bill requiring that subscriptions or memberships made online must also be able to be canceled online.
The proposed state laws are virtually identical to the “click-to-cancel” rules approved last year by the Federal Trade Commission under President Joe Biden. The federal rules originally set to go into effect in May, but were postponed 60 days amid speculation that President Donald Trump’s FTC would alter them.
On Tuesday, however, a federal appeals court threw out the rules entirely, finding that the FTC had not followed procedural requirements on economic analysis prior to finalizing the ruling.
The suit against the FTC’s process was brought by business groups that stood to lose subscription-service revenue had the rule survived.
The fact that the federal government has stumbled on the issue makes is all the more important that state legislators act, Rep. Joe Ciresi, D-Montgomery County, the sponsor of one of the bills, said this week.
“We can take control of the situation quickly here in Pennsylvania, because it is an issue,” Ciresi told PennLive. “Everyone can relate to it somehow.”
The classic example of a “negative option” deal is a subscription that begins with a free trial but automatically converts to a paid service after a period of time. A bill from Rep. Lisa Borowski, D-Delaware County, would put in place rules for notification prior to renewal, and require that consumers be able to opt out of renewal using the same means they originally used to sign up.
The bill would ensure that businesses “provide value to customers instead of simply betting they will forge to cancel a subscription they don’t really need,” Borowski said.
Ciresi’s bill would require that all subscriptions be cancellable online if the customer originally signed up online. The bill even mandates that information on renewals and how to cancel them be posted on web pages in a font size that is suitably large.
The idea came out of experiences from his constituents, staffers, and even his own family, Ciresi said, who had signed up for memberships they found maddeningly difficult to stop getting charged for even after the initial contract had ended.
“We got pushback from some companies, but we worked through it,” Ciresi said. “We’re not advocating for anyone to cancel your service or to get out of your contract. I’m not here to hurt any business, I’m here to help the consumer.”
The House bills would not cover certain services that are separately regulated, such as utilities covered by the state Public Utility Commission, or the Federal Communications Commission.
The bills would also not cover gyms – notorious for arduous membership cancellation policies – which are controlled by the state Health Club Act. This could be amended into the legislation, which Ciresi said he was open to.
Both bills passed the House with broad bipartisan support. If the legislation is agreed to by the state Senate and signed by Gov Josh Shapiro, Pennsylvania would join several other states that have moved to create such laws over the past year since the FTC began working on its now-defunct rule.
New York, California, Minnesota, Tennessee, and Virginia have all enacted state-level policies that include provisions similar to Ciresi and Borowski’s bills.