New York City to ban firms from using subscription traps

WASHINGTON, July 10 (Reuters) - New York City will adopt a policy to ban firms from engaging in subscription traps and enable consumers to easily cancel subscriptions through a so-called "Click to Cancel" rule, city officials said on Friday.

Here are some details:

• The offices of New York City Mayor Zohran Mamdani and Department of Consumer and Worker Protection Commissioner Samuel Levine cast the new policy as the first of its kind for a municipal government in the US.

  
  

• The policy will crack down on both "junk" fees and subscription traps, the offices said in a statement.

The so-called "Click to Cancel" rule takes effect on October 1, the statement said.

• The rule applies to automatic renewal and continuous service subscriptions and requires businesses to clearly disclose subscription terms while providing a straightforward and transparent cancellation process, it said.

  
  

• The "junk" fees rule requires businesses to advertise the full price of goods and services upfront, including all mandatory charges and fees, according to the statement.

  
  

• Hidden fees cost an average family of four an estimated $3,200 each year, city officials said, citing consumer reports.

Businesses in violation will be subject to restitution for consumers and civil penalties beginning at $525 per violation, city officials said about the policy.

• Former President Joe Biden's administration had introduced a national "Click to Cancel" rule that was struck down by a federal appeals court last year before its scheduled date to go into effect.

  
  

• Mamdani, a democratic socialist, had campaigned on a promise to make New York City more affordable and took office in January.

  
  

Reporting by Kanishka Singh in Washington; Editing by Tom Hogue/REUTERS