Letter to New York City Department of Consumer and Worker Protection Regarding Proposed Click-to-Cancel Rule

Dear New York City Department of Consumer and Worker Protection,

Based in New York City, the Roosevelt Institute is a think tank, a student network, and the nonprofit partner to the Franklin D. Roosevelt Presidential Library and Museum. Roosevelt’s think tank engages in critical research and policy development to advance new ideas that rebalance power and repair past harms—so that our economy and society work for everyone.

The Roosevelt Institute is glad that the Department of Consumer and Worker Protection is considering adding rules to ensure that consumers can easily cancel subscriptions and are not subject to deceptive and unconscionable trade practices relating to the cancellation of subscriptions. To the degree that it is helpful in your consideration of the rule, the Roosevelt Institute has analyzed the potential benefits of the proposed rule, applying the methodology used by the Federal Trade Commission (FTC) in its similar rulemaking with appropriate adjustments for New York City.

The FTC’s methodology offers low and high estimates of the benefits of the rule. These estimates are based on the rule’s direct consumer benefit of easier subscription cancellations, which will create time savings for consumers when cancelling subscriptions and, in some circumstances, save consumers months of subscription fees by successfully cancelling subscriptions earlier. According to our analysis, those benefits for the adult population of New York City would range from $21.5 million to $162.5 million per year, saving New Yorkers at least 600,000 hours per year. Over the course of 10 years, the total economic benefits we calculate from the rule (that is, present discounted value) would range from $197.3 million to $1.491 billion. We also perform a sensitivity analysis that shows these estimates are not significantly affected by different numerical assumptions and discuss factors that could lead these estimates to overstate or understate the benefits from this rule.

While some of the factors we identify in our sensitivity analysis suggest this approach could overestimate benefits (for example, if proximity makes it easier for New Yorkers to cancel subscriptions in person), on balance it seems likely that our estimates significantly understate the benefits of the rule due to effects that the FTC did not attempt to quantify. Specifically, New Yorkers may benefit from a more competitive marketplace in which companies, aware that it is now easier to cancel subscriptions, provide better quality or prices to keep consumers from cancelling. Additionally, the rule may improve consumer confidence in using subscriptions and increase the number of consumers who are willing to subscribe and obtain the convenience and possible cost savings that subscriptions can provide, benefiting scrupulous businesses as well. And New York consumers may be spared the cost of additional unwanted subscriptions that will be easier to cancel.

We have explained our analysis in the attached appendix.

Thank you for your work on this rulemaking.

Sincerely,

Brad Lipton

Director, Corporate Power and Financial Regulation

Noa Rosinplotz

Senior Research Associate