As our readers know, the Federal Trade Commission (“FTC”) has proposed amendments which attempt to simplify the process of canceling subscription-based services. Most consumers have experienced how companies can make it frustratingly difficult for them to cancel a recurring subscription. Now, the New York State Attorney General’s Office (“NYAG”) has levied allegations against satellite radio company SiriusXM (“Sirius”) claiming that it deliberately acts to prevent consumers from canceling their subscription plans.
Subscription Cancellation Practices Alleged To Have Violated New York’s General Business Law
In its lawsuit, the NYAG alleges that Sirius deceived its subscribers by requiring consumers to either call-to-cancel or chat-to cancel their Sirius subscriptions. Under either scenario, Sirius requires consumers to speak with a live agent in order to complete the subscription cancellation process. Once connected with a live agent, the NYAG alleges that Sirius, as part of its strategy to prevent consumers from canceling their subscriptions, deceives consumers by training “agents to put subscribers through a lengthy, six-part script, and to refuse cancellation until either the agent reaches the end of the script, or the subscriber’s frustration reaches a point that they become openly agitated by the process – or give up altogether.” As alleged in the lawsuit, according to Sirius’ own data, it takes subscribers an average of 11.5 minutes to cancel by phone and 30 minutes to cancel online. These long wait times, according to the lawsuit, have caused more than 578,000 Sirius subscribers to abandon their cancellation efforts during the years of 2019 and 2021. In a press release, the NYAG stated “[h]aving to endure a lengthy and frustrating process to cancel a subscription is a stressful burden no one looks forward to, and when companies make it hard to cancel subscriptions, it’s illegal.”
In addition to facing long wait times, the NYAG alleges that Sirius customer service agents bombard consumers with new subscription offers to prolong the subscription cancellation process and to prevent consumers from canceling. Even if a consumer successfully navigates the subscription cancellation process, the NYAG further alleges that Sirius does not always cancel the subject subscription. As a result, the NYAG claims that Sirius’ use of these strategies to deter and prevent subscription cancellation violates Section 349 of New York’s General Business Law.
Canceling A Subscription Should Be As Easy To Accomplish As It Is To Sign Up
The NYAG lawsuit is another example of regulatory and enforcement agencies taking aim at companies that employ laborious subscription cancellation practices. Recently, these agencies have made regulating the subscription cancellation process an area of paramount importance.
On January 16, 2024, the FTC will hold a virtual informal hearing on the proposed amendments to its current automatic renewal rules; these changes are likely to take effect shortly thereafter. Significantly, one of the proposed amendments requires companies to make canceling subscription-based consumer services as easy as it is to sign up.
Federal and state consumer protection regulations are constantly evolving and, as such, hiring experienced counsel is more important than ever. The attorneys at Klein Moynihan Turco have substantial experience defending companies against deceptive business practice allegations and ensuring subscription renewal compliance.
If you need assistance with updating your subscription cancellation processes or otherwise complying with applicable federal and state laws, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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