Many health tech and digital health companies offer subscription or membership services to clients and patients on an auto-renewal basis. Under this model, a subscriber's credit card is automatically charged on a monthly, quarterly or yearly basis.
On March 23, 2023, the Federal Trade Commission (FTC) announced a proposed update to its rules governing automatic renewals. If adopted, the revised rules would enhance the FTC's authority to prosecute companies—as well as their owners and officers—in the automatic renewal space.
The proposed rule would, among other things, require health tech and digital health companies to update their client agreements and policies and practices to:
- Institute a new "click to cancel" provision, making it as easy for clients to cancel their enrollment as it was to sign up
- Obtain express consent before making additional sweetening offers to retain the client
- Provide annual reminders of the automatic renewal of clients' subscriptions for or enrollments in any nonphysical goods
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