Context
Recently, the New York City announced the enforcement of the ‘Click to Cancel’ rule, which requires businesses to make subscription cancellation as easy as the process of signing up.
What Is the ‘Click to Cancel’ Rule?
- The ‘Click to Cancel’ rule aims to simplify subscription cancellation by ensuring that consumers can cancel a service as easily as they subscribed to it.
- It seeks to prevent businesses from using complicated cancellation procedures to retain customers who no longer wish to continue their subscriptions.
- The rule requires cancellation to be available through the same medium used for signing up.
Why Is the Rule Needed?
- Dark Patterns: Businesses may use deceptive interface designs, such as hidden cancellation buttons, multiple menus and confusing steps, to discourage consumers from cancelling subscriptions.
- Unwanted Renewals: Free trials may automatically convert into paid subscriptions without consumers being adequately informed.
- Unequal Cancellation Processes: Customers may be required to make phone calls, send emails or letters, or visit business premises to cancel services they subscribed to online.
- Consumer Vulnerability: Senior citizens, minors, vulnerable adults and consumers with limited digital or literacy skills may face additional difficulties.
- Financial Loss: Consumers may continue paying for unwanted services because cancellation is unnecessarily complicated.
Does India Have a ‘Click to Cancel’ Policy?
- India has certain regulatory measures to protect consumers from deceptive subscription practices, but the report highlights gaps in cancellation-related protections.
- RBI’s Digital Payments – E-mandate Framework
- The Reserve Bank of India (RBI) introduced an e-mandate framework to improve transparency in recurring digital payments.
- Issuers must send a pre-transaction notification at least 24 hours before a recurring debit.
- The notification must include:
- Merchant’s name.
- Transaction amount.
- Date and time of the debit.
- E-mandate reference number.
- Reason for the debit.
- A post-transaction notification must also be sent to the customer.
- Limitation: These provisions improve transparency in recurring payments but do not, by themselves, ensure that cancelling a subscription is as easy as signing up.
- Datum Intelligence Study (June 2026): Major e-commerce platforms (Nykaa, Myntra, Flipkart, Amazon) and quick-commerce platforms (Big Basket, Zepto, Swiggy Instamart, Blinkit) did not offer pre-renewal reminders for free-trial billing. Cancellation took more than four steps on most of them.
| Important CTC From this article Dark Patterns |
Q. Consider the following statements regarding the Reserve Bank of India's (RBI) Digital Payments – E-mandate Framework:
1. It requires a pre-transaction notification at least 24 hours before a recurring debit.
2. The notification must include the merchant's name, transaction amount and date/time of the debit.
3. It completely prohibits merchants from offering automatically renewing subscriptions.
4. A post-transaction notification is also required.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
Answer: (b) 1, 2 and 4 only
Statement 1 is correct: The framework directs the issuer of a recurring mandate to send a pre-transaction notification to the customer at least 24 hours before the debit.
Statement 2 is correct: The notification must carry the merchant’s name, the transaction amount and the date and time of the debit. It must also give the e-mandate reference number and the reason for the debit.
Statement 3 is incorrect: The framework does not ban auto-renewing subscriptions. It only makes recurring debits transparent, so merchants cannot silently deduct funds.
Statement 4 is correct: A post-transaction notification is also required.