Inactive Subscription Cancelation

Legal Precedents and Analogous Cases

1. FTC Enforcement Actions Against Deceptive Subscription Practices

The Federal Trade Commission (FTC) has a long history of enforcing consumer protection laws to prevent deceptive practices, including issues with subscription models. For example:

• FTC v. Amazon.com (2016): The FTC filed suit against Amazon for failing to provide sufficient safeguards against unauthorized in-app purchases by minors. The court ruled that Amazon’s practices were unfair and deceptive under the FTC Act.
• Relevance: Subscription services that continue charging consumers without activity could be viewed as similarly exploitative. Your proposal aligns with the FTC's mandate to ensure businesses operate transparently and fairly.

2. California’s Automatic Renewal Law (ARL)

California’s ARL requires companies offering subscriptions to:

• Clearly disclose the terms of the subscription.
• Obtain explicit consent before charging customers.
• Provide an easy mechanism for cancellation.
• Relevance: Your proposal builds on these principles, addressing a common gap in existing laws: the automatic renewal of subscriptions despite inactivity, which many consumers may perceive as unfair or exploitative.

3. Oberdorf v. Amazon.com, Inc. (2019)

While this case focused on liability for defective products sold on Amazon’s marketplace, the court highlighted the responsibility of large corporations to protect consumers from harm.

• Relevance: Similar to product liability, corporations profiting from subscription models arguably bear responsibility to mitigate financial harm caused by charging for unused services.

4. Billing Practices Cases

The case of Hinkle v. Assurant, Inc. (2018) involved hidden fees and unauthorized billing practices. Courts have consistently ruled that businesses must obtain clear and ongoing consent for charges.

• Relevance: Charging for inactive subscriptions could be considered unauthorized billing if consumers are not actively consenting through use.

Existing Laws and Consumer Protection Trends

1. Unfair and Deceptive Practices

Under the FTC Act (Section 5), practices that are "unfair or deceptive" are prohibited. Inactivity-based subscription billing could be interpreted as "unfair" because:

• Consumers may forget they are subscribed.
• The company profits from a service the consumer does not use, which may not be in good faith.

2. Analogous to Dormancy Fees for Gift Cards

Federal laws like the CARD Act (2009) restrict dormancy fees on gift cards to protect consumers from losing value due to inactivity.