The Federal Trade Commission today proposed a “click to cancel” provision requiring sellers to make it as easy for consumers to cancel their enrollment as it was to sign up. That is just one of several significant updates the Commission is proposing to its rules regarding subscriptions and recurring payments. The new click to cancel provision, along with other proposals, would go a long way to rescuing consumers from seemingly never-ending struggles to cancel unwanted subscription payment plans for everything from cosmetics to newspapers to gym memberships.

“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” said FTC Chair Lina M. Khan. “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.”

The notice of proposed rulemaking announced today is part of the FTC’s ongoing review of its 1973 Negative Option Rule, which the agency uses to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs.

These programs are widespread in the marketplace and can provide substantial benefits to both consumers and businesses. But they can become problematic when marketers fail to make adequate disclosures, bill consumers without their consent, or make cancellation either difficult or impossible—such as by requiring customers to cancel in person or keeping them stuck on hold waiting to talk to customer service. Each year, the FTC receives thousands of consumer complaints about such practices.

The current patchwork of laws and regulations available to the FTC do not provide consumers and industry with a consistent legal framework. Accordingly, the proposal would make several specific changes, including implementing:

• A simple cancellation mechanism: If consumers are unable to easily leave any program when they want to, the negative option feature becomes nothing more than a way to continue charging them for products they no longer want. To address this issue, the proposed rule would require businesses to make it at least as easy to cancel a subscription as it was to start it. For example, if you can sign up online, you must be able to cancel on the same website, in the same number of steps.

• New requirements before making additional offers: The proposed rule would allow sellers to pitch additional offers or modifications when a consumer tries to cancel their enrollment. But before making such pitches, sellers must first ask consumers whether they want to hear them. In other words, a seller must take “no” for an answer and upon hearing “no” must immediately implement the cancellation process.

• New requirements regarding reminders and confirmations: 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.

The Commission vote approving publication of the notice of proposed rulemaking was 3-1, with Commissioner Christine S. Wilson voting no. Chair Khan issued a separate statement, in which she was joined by Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya. Commissioner Wilson issued a dissenting statement. 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.

The FTC has developed a fact sheet summarizing the proposed changes to the Negative Option Rule. The primary staffer on this matter is Hampton Newsome in the FTC’s Enforcement Division.

The Federal Trade Commission will hold an informal hearing on its proposed rule prohibiting government and business impersonation at 1 p.m. on May 4, 2023.

In a Federal Register Notice, the FTC notes that during the recent public comment period regarding the Notice of Proposed Rulemaking, an informal hearing was requested by a commenter. Any member of the public wishing to speak at the informal hearing must request to speak by April 14, 2023. Requests can be made in response to the Federal Register Notice on regulations.gov, where it will be posted shortly.

The informal hearing will be held virtually and livestreamed on ftc.gov.

The Federal Trade Commission staff are seeking information on the business practices of cloud computing providers including issues related to the market power of these companies, impact on competition, and potential security risks.

In a Request for Information, FTC staff are seeking information about the competitive dynamics of cloud computing, the extent to which certain segments of the economy are reliant on cloud service providers, and the security risks associated with the industry’s business practices. In addition to the potential impact on competition and data security, FTC staff are also interested in the impact of cloud computing on specific industries including healthcare, finance, transportation, e-commerce, and defense.

“Large parts of the economy now rely on cloud computing services for a range of services,” said Stephanie T. Nguyen, the FTC’s Chief Technology Officer. “The RFI is aimed at better understanding the impact of this reliance, the broader competitive dynamics in cloud computing, and potential security risks in the use of cloud.”

Cloud computing, which is used by a wide range of industries for on-demand access to data storage, servers, networks, and more, is increasingly central to many areas of the economy. The agency has brought several cases against companies that failed to implement basic security safeguards to protect data they stored on third-party cloud computing services including recent cases involving the alcohol delivery platform Drizly and education technology provider Chegg. The FTC has also issued guidance to businesses on steps they can take to secure and protect data stored in the cloud. The RFI will allow the agency to gather more information and insights on cloud computing as a whole.

Among the topics the FTC is seeking comment on include:

• the extent to which particular segments of the economy are reliant on a small handful of cloud service providers;
• the ability of cloud customers to negotiate their contracts with cloud providers or are experiencing take-it-or-leave it standard contracts;
• incentives providers offer customers to obtain more of their cloud services from a single provider;
• the extent to which cloud providers compete on their ability to provide secure storage for customer data;
• the types of products or services cloud providers offer based on, dependent on, or related to artificial intelligence; and the extent to which those products or services are proprietary or provider agnostic; and
• the extent to which cloud providers identify and notify their customers of security risks related to security design, implementation, or configuration.

The public will have until May 22, 2023 to submit a comment. Comments will be posted to Regulations.gov after they are submitted.

Staff from across the FTC’s Office of Technology, Bureau of Competition, and Bureau of Consumer Protection are collaborating on this effort.

The Federal Trade Commission will host a public workshop on May 18, 2023, in Washington, DC, to examine proposed changes to its Ophthalmic Practice Rules, also known as the Eyeglass Rule. The workshop, A Clear Look at the Eyeglass Rule, is free and open to the public, and pre-registration is not required.

In December 2022, the FTC announced a proposal to update the Eyeglass Rule, which is designed to facilitate consumer choice and promote competition in the eyeglass market by requiring ophthalmologists and optometrists to provide patients with a copy of their prescription immediately after the completion of an eye exam. Under the rule, prescribers cannot require that patients buy eyeglasses, pay an additional fee, or sign a waiver or release as a condition of providing them with a copy of their prescription.

The proposed rule changes would require prescribers to get a signed statement from the patient confirming that they have received their prescription, and keep a record of that confirmation for at least three years. The amendments would also allow prescribers, with a patient’s verifiable affirmative consent, to provide the patient with a digital copy of a prescription in lieu of a paper copy; clarify that a patient’s proof of insurance coverage will be deemed to be a payment for the purpose of determining when a prescription must be provided; and change the term “eye examination” to “refractive eye examination” throughout the rule.

According to the Federal Register notice announcing the workshop, the half-day event may address the proposed confirmation of prescription release requirement for eyeglass prescriptions, consumers’ and prescribers’ experiences with the implementation of a similar requirement for contact lens prescriptions, other proposed changes to the rule, and issues raised in public comments submitted in response to January’s notice of proposed rulemaking. A more detailed agenda will be published in the coming weeks.

The workshop will be held at the Constitution Center in Washington, DC, from 9:00 am to 1:00 pm ET, in the first-floor conference room. It also will be available for viewing live on the internet. The Commission is accepting requests to participate as a panelist from interested parties through April 7, 2023, via email at eyeglassworkshop2023@ftc.gov. Written comments related to agenda topics or issues discussed at the workshop must be received by June 20, 2023. Information about how to submit requests to participate or comments can be found in the notice announced today.

The Commission vote approving publication of the Federal Register notice was 3-0-1, with Commissioner Christine S. Wilson not participating. It will be published in the register shortly. The lead staffers on this matter are Sarah Botha and Alysa S. Bernstein in the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission took action under the Opioid Addiction Recovery Fraud Prevention Act (OARFPA), suing Dr. Dalal A. Akoury and a set of companies she controls that operate as AWAREmed Health & Wellness Resource Center, a medical clinic, for making a wide range of false or unsupported claims for addiction treatment services, cancer treatment services, and the treatment of other serious conditions. The Department of Justice filed the case on the FTC’s behalf.

The proposed order settling the Commission’s complaint bars Dr. Akoury and her AWAREmed clinic from making such unsupported claims and requires her to pay a $100,000 civil penalty.

“The opioid crisis claims lives and destroys communities all across the United States but especially in rural areas,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Doctors peddling phony promises should know that the FTC will use its strengthened authority from Congress to stop them from exploiting Americans struggling with addiction.”

Dr. Akoury’s AWAREmed clinic is based in Johnson City, Tennessee, and previously was located in Myrtle Beach, South Carolina. Since at least 2018, the complaint states, the AWAREmed defendants have advertised a range of treatments for patients suffering from addiction including substance use disorders from opioids to alcohol. Other deceptive treatment advertisements for cancer and chronic diseases like Parkinson’s disease and Alzheimer’s disease.

In their ads, the defendants described their clinic as the “Most Effective Medical Clinic Anywhere,” and claimed that it “Boasts a 98% Improvement Rate…Treating Just About…Anything,” including addictions to methadone and other drugs, alcohol, food, and gambling. Despite being warned by the FTC that making unsupported addiction treatment claims is unlawful, the defendants continued to claim without evidence that their treatment was “rapid, painless, effective, and safe,” and had better results in less time than 30-day treatment programs.

The defendants also used their website to promote their cancer treatments, claiming that patients would experience “exceptional results,” and that virtually all patients at any disease stage would improve moderately to significantly after treatment at the AWAREmed clinic. In similar ads, the defendants repeated their claims of near-universal success for chronic diseases such as Alzheimer’s and Parkinson’s.

Finally, the FTC alleges that in 2017 and 2018, Dr. Akoury appeared in nearly 100 brief TV segments hosted by reporters with Fox News’s Myrtle Beach affiliate, promoting AWAREmed in what appeared to be news interviews. It was never disclosed, however, that some of those appearances were actually paid ads placed by Dr. Akoury.

In addition to barring the defendants from violating the FTC Act and OARFPA, the proposed court order prohibits them from making the deceptive health claims alleged in the complaint, requires them to have competent and reliable scientific evidence for any health-related claims they make in advertising and marketing, and prohibits them from formatting ads in a way that may be interpreted as news or informational programing. It also requires them to pay a $100,000 civil penalty.

The Commission vote authorizing the staff to file the complaint and proposed order was 4-0. The DOJ filed the complaint and order on behalf of the FTC in the U.S. District Court for the Eastern District of Tennessee.

With fraud on social media surging, the Federal Trade Commission has issued orders to eight social media and video streaming platforms seeking information on how these companies scrutinize and restrict paid commercial advertising that is deceptive or exposes consumers to fraudulent health-care products, financial scams, counterfeit and fake goods, or other fraud.

The amount of money consumers have reported losing to fraud that originated on social media platforms has skyrocketed since 2017. In 2022 alone, consumers reported losing more than $1.2 billion to fraud that started on social media, more than any other contact method, according to FTC data.

The Commission also is seeking information about how the social media and video streaming companies ensure that consumers are able to identify commercial advertising on their platforms as advertising.

The orders, which the companies are required to comply with by law, were sent to: Meta Platforms, Inc.; Instagram, LLC; YouTube, LLC; TikTok, Inc.; Snap, Inc.; Twitter, Inc.; Pinterest, Inc.; and Twitch Interactive, Inc.

“Social media has been a gold mine for scammers who tout sham products and other scams that have cost consumers enormously in recent years,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “This study will help the FTC ensure that social media and video streaming companies are doing everything they can to keep scammers and deceptive ads off their platforms.”

The orders will collect information about the companies’ standards and policies related to paid commercial ads and their processes for screening and monitoring for compliance with those standards and policies, including through human review and the use of automated systems. The orders also require the companies to report their ad revenue, the number of ad views, and other performance metrics, including for ads involving categories of products and services more prone to deception such as those intended to treat, prevent, or cure substance use disorders and tout income opportunities.

These orders will help the Commission better understand how prevalent deceptive advertising is on social media and video streaming platforms, the consumers who may be harmed by that advertising, and the effectiveness of the platforms’ oversight of advertisers, including whether the companies treat English-language and Spanish-language ads differently. The study also should shed light on how the platforms create ads, including any use of generative artificial intelligence, and track, and classify ads, as well as the ad formats offered to advertisers, including shoppable ads, which allow consumers to purchase products or services directly through the ad, and virtual reality and other extended reality ads.

In addition, the Commission seeks information on how these platforms help consumers distinguish advertising and other commercial messages from other types of content, including disclosure tools for endorsers and influencers.

The orders seek information for the calendar years 2019 through 2023, which allows for the Commission to study relevant business conduct since the start of the COVID-19 pandemic. The orders were sent using the FTC’s 6(b) authority, which authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose. 

The Commission voted 4-0 during an open meeting to issue the 6(b) orders to the eight social media and video service services. 

The staff attorneys on this matter are Laura Sullivan and Rafael Reyneri from the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission has launched an inquiry into the small business credit reporting industry, ordering five firms in that industry to provide the Commission with detailed information about their products and processes. The orders will be issued to Dun & Bradstreet, Experian Information Solutions, Equifax, Ansonia Credit Data, and Creditsafe USA.

“Like consumers, small businesses rely on fair and accurate credit reports in order to access key services. But because it isn’t covered by the same laws that apply to consumer services, credit reporting for businesses is tremendously opaque,” said FTC Chair Lina M. Khan. “This FTC inquiry will shine a much-needed light on the credit reporting industry and the related challenges that small businesses face.”

Unlike credit reports for individual consumers, which are governed by the Fair Credit Reporting Act, there is no federal law that specifically outlines processes and protections available to small businesses when it comes to credit reporting. This can make business credit reporting hard to understand, and it can be particularly difficult for small businesses to navigate how to correct errors or omissions in their credit reports in a timely fashion.

These reports can significantly affect small businesses, potentially impacting the terms on which they can obtain the goods, services, and equipment they need to stay in business. Because many of these credit reporting companies start developing a company’s credit report at the time it incorporates, tapping public records and other available financial data, business owners may not even be aware a report about them exists. Sometimes small businesses only discover they have a credit report when they are denied credit by a supplier.

The Commission’s inquiry will examine multiple aspects of how information is collected and processed for business credit reports, how the reports are marketed, and how and whether the credit reporting companies address factual errors in the reports. In addition to information about these topics, the orders also require the companies to provide information on services they provide to businesses to monitor or enhance their own credit reports.

Last April, the FTC secured an order with Dun & Bradstreet in which the company was required to make changes to its processes to help ensure that it responds promptly and fully to businesses’ complaints about incorrect information in their business credit reports, and to be upfront around the limitations of the company’s business credit reporting products. The company was also required to provide refunds to affected customers, and to make it easier for customers to cancel certain business credit report monitoring and managing products.

The FTC is issuing the orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct studies without a specific law enforcement purpose. The companies will have 60 days from the date they receive the order to respond.

The Commission vote to issue the orders was 4-0.

Following a public comment period, the Federal Trade Commission has finalized a final consent order against Ohio-based LCA-Vision, doing business as LasikPlus and Joffe MediCenter, related to allegedly deceptive ads for LASIK laser eye surgery.

According to the FTC’s January 2023 complaint, LCA’s ads allegedly tricked consumers into believing they could have their vision corrected for less than $300. In reality only 6.5 percent of consumers lured in for consultations were eligible for the advertised promotional price for both eyes. In some ads, LCA also neglected to tell consumers up-front that the promotional price was per-eye only. Despite the ad’s claims, LCA typically quoted patients a price between $1,800 and $2,295 per eye for anyone  with worse than near-normal vision (20/40 eyesight, good enough to drive without glasses).

The final order approved by the Commission settles the complaint and requires the defendants to pay $1.25 million for using the deceptive bait-and-switch advertising. It also bars LCA from the deceptive conduct alleged in the complaint and requires them to make certain clear and conspicuous disclosures when advertising LASIK at a price or discount for which most consumers would not qualify.

The Commission vote approving the final consent order was 3-1, with Commissioner Christine S. Wilson dissenting. The staff attorneys on this matter are Paul Spelman and Rafael Reyneri of the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission sent a new report to Congress detailing the consumer issues that affect American Indian and Alaska Native (AI/AN) populations, as well as the FTC’s enforcement, outreach and education work on these issues.

The report summarizes the agency’s efforts to hear directly from tribal leaders, community members, advocates, and others about issues affecting their communities, and provides analysis of the FTC’s data from the Consumer Sentinel Network database.

The report reflects the FTC’s conversations with community members and advocates about issues such as: auto purchasing and financing, predatory lending, impersonation scams, tech support scams and romance scams, among others. The FTC’s own consumer report data shows that government impersonation and prize, sweepstakes, and lottery scams were the most frequent scams reported to the FTC from majority AI/AN ZIP codes. Government and business impersonation scams are the focus of an ongoing Commission rulemaking effort.

The report also summarizes FTC law enforcement actions relating to the consumer abuses identified as impacting AI/AN communities. These include the recent case against Tate’s Auto, a group of dealerships located near the border of the Navajo Nation that the FTC charged targeted consumers with deceptive ads and unfair financing practices.

In the report, the Commission details extensive outreach to AI/AN communities and efforts to build partnerships and work with community media, as well as the launch of a new website at ftc.gov/NativeAmerican. The site aggregates consumer protection information and links on the issues identified in the report.

The report recommends continuing to expand partnerships with AI/AN organizations, tribal leaders, advocates, and other groups to inform the Commission’s law enforcement, education and outreach, and research efforts moving forward.

The Commission vote to issue the report to Congress was 4-0.

The Federal Trade Commission has finalized an order requiring Epic Games, the maker of the Fortnite video game, to pay $245 million to consumers to settle charges that the company used dark patterns to trick players into making unwanted purchases and let children rack up unauthorized charges without any parental involvement.

In a complaint announced in December as part of a settlement package with Epic, the FTC said that Epic deployed a variety of design tricks known as dark patterns aimed at getting consumers of all ages to make unintended in-game purchases. Fortnite’s counterintuitive, inconsistent, and confusing button configuration led players to incur unwanted charges based on the press of a single button. The company also made it easy for children to make purchases while playing Fortnite without requiring any parental consent. According to the FTC’s complaint, Epic also locked the accounts of customers who disputed unauthorized charges with their credit card companies.

Under the FTC’s order, Epic must pay $245 million, which will be used to provide refunds to consumers. The order also prohibits Epic from charging consumers through the use of dark patterns or from otherwise charging consumers without obtaining their affirmative consent. Additionally, the order bars Epic from blocking consumers from accessing their accounts for disputing unauthorized charges.

After receiving five comments, the Commission voted 4-0 to approve the complaint and order against Epic and the responses to the commenters.

As part of a separate settlement, also announced in December, Epic agreed to pay a $275 million penalty to settle FTC allegations that the company violated the Children’s Online Privacy Protection Act Rule.

Consumers who believe they may have been injured by Epic’s practices can visit FTC.gov/Fortnite for more information on the refund process.