Planet Fitness risks losing customers with FTC’s ‘Click to Cancel’ rule

The FTC’s new rule simplifies subscription cancellations, raising concerns for companies like Planet Fitness.

The Federal Trade Commission (FTC) has finalized a new rule called "Click to Cancel" to simplify the cancellation process for subscriptions and memberships. 

FTC Commissioner Lina Khan announced that the rule requires businesses to offer cancellation options as straightforward as the sign-up process, particularly for online services. “If consumers signed up online, they must also be able to cancel on the same website in the same number of steps,” Khan explained.

The rule is part of the FTC’s "Time Is Money" initiative, designed to reduce consumer frustrations. According to Khan, the agency now receives around 70 daily complaints about difficulties canceling subscriptions, a dramatic increase from just a few years ago. Last year, the proposed rule prompted about 16,000 public comments, highlighting widespread consumer dissatisfaction.

This new rule could have significant implications for companies like Planet Fitness. On X, formerly Twitter, users have reacted with memes, claiming, "Planet Fitness bout to go out of business," reflecting uncertainty about the company's future. 

Planet Fitness bout to go out of business https://t.co/VoqWjqi7MO

— Nicole Green (@whatnicolewore) October 16, 2024

The gym chain has previously come under scrutiny for requiring in-person or written cancellation for many memberships, although they are expanding online cancellation options.

Planet Fitness after hearing about the law being passed that allows people to cancel their membership with a click of a button. pic.twitter.com/BacR94vKNX

— teatime75 (@teatime75) October 16, 2024

“Over recent years, we’ve seen increasingly that some firms make it extraordinarily easy to sign up but absurdly difficult to cancel,” said Khan. “Americans end up paying more and wasting time, and that’s what we’re going to end with this rule.”

Khan criticized current cancellation systems, describing them as a “doom loop” of unhelpful customer service. She emphasized that fairness and transparency are the goals of this new regulation. However, the U.S. Chamber of Commerce opposes the rule, arguing that it would “micromanage business practices.”

Khan dismissed those concerns, stating, “If a business is dependent on tricking or trapping people into subscriptions, that’s not a good business model.” The FTC has already taken legal action against Amazon for similar allegations.