Episode Transcript
[00:00:04] Speaker A: Welcome to the Subscription Heroes podcast. I'm your host for this episode, Baird hall, and we are talking all about the FTC's new click to cancel ruling that was announced and released last week. It's been a few business days. We have been talking to lawyers. We have been going through the document in great detail, and we'll be joined by Nick Vogel, our CEO here at Turnkey. He's a former lawyer turned software engineer. He's been building cancel flows for over six years now. So he is one of the best resources on this topic. And we'll also have Scott her for our chief product officer to help us think through the product and design implications of this. So it's a great episode. This is not legal advice, and we will be sure to update you on this feed as we learn more about this ruling and things may change. So be sure to subscribe and we will help you navigate anything that they throw at us. Let's start the show.
All right, cool. Well, let me do a quick readout here to get everybody up to speed. There could be a lot of people listening that maybe haven't caught the news and aren't familiar with what's happening. So the Federal Trade Commission, the FTC is, will call it for most of the podcast. It's a government agency responsible for protecting consumers and promoting competition. And they announced a new click to cancel rule. This was announced last Thursday, and this is just a few business days later. So this is all very, very fresh. But the rule requires companies to make it easy for consumers to cancel a subscription or a recurring charge that was set up. The goal is to eliminate hoops and that consumers often have to jump through to cancel services they no longer want.
Most of the rules are going to take effect in 180 days, essentially six months after that publication was launched last week.
So this is very much still very new and unfolding and more to come. But Nick, what's your kind of read on the basic overview of this ruling?
[00:02:10] Speaker B: I think it formalizes a best practice, which is that if you have self serve sign ups, you should have some way of self serve cancellation, which is something that we've been a big proponent of for a long time, since we started this company, is that if you want to keep customers and maintain goodwill, you should make it easy to cancel. And they'll come back to you later when they need your service or product again. There are some ambiguities, though, in it that are a little troubling. And, you know, we hope for more bright line tests within the rule. But I think we've got enough based on some of the comments and things where we can definitely directly companies on what to do to ensure that they're aiming for the right place in the rules.
[00:02:48] Speaker A: Scott, you've been working in the subscription world for a long time. What was your initial reaction when you first saw the news drop?
[00:02:57] Speaker C: Nothing like governmental rules to get the blood flowing.
I think it's something that is a net benefit for everybody. I think that it codifies what we've been saying all along should be how you approach cancellations. But keep in mind, it's still fragile. It's a rule, it's not legislation. So this kicks up a lot of dust into how it'll be implemented, when, to what extent. If it gets overturned or modified in some way, will states take the rule and apply it to their own legislation and pass that on a per state basis?
It could be really fragmented from here. So this is that messy six month period where anything goes right at this time.
[00:03:45] Speaker A: Can we classify who this ruling is going to affect? Is it every single company that offers a digital subscription online? Is it just b, two c, b, two b? What do we think so far, as far as who can expect to be affected by this?
[00:04:00] Speaker B: About everybody. Anybody that has a subscription as a consumer is protected under this rule. And then anybody that has what they call super hard to parse the negative option type of membership. Negative option is essentially just silence. Means that you will continue to be billed. As we know, SaaS is essentially eating the world from consumer services to media to box companies to software. So, yeah, really, any kind of business across different verticals. And then it's not just b, two c too, which is you think of SaaS and you think of business to consumer as being like, okay, the FTC is there to protect consumers, but it also applies to B, two B SaaS companies. B, two B relationships. As long as it's not this giant contract that was negotiated at arm's length, pretty much everything else seems to fall into this new rules purview.
[00:04:55] Speaker A: I've been working in SaaS for over a decade and I have never heard the term negative option. Scott, have you ever heard that before?
[00:05:03] Speaker C: Again, nothing like government rules to get the blood flowing.
[00:05:07] Speaker A: Is this a term from like 1970 or something?
[00:05:10] Speaker C: It really does feel like that.
[00:05:12] Speaker B: It is from 1970. Do you want the history on it? Because I was like, bring it.
[00:05:16] Speaker C: I was thinking like yellow pages and that kind of stuff.
[00:05:19] Speaker B: I heard negative option and I thought it was some kind of derivatives trade or something, some kind of market instrument. You hear negative options. Yeah. So it's interesting though, like a negative option if you actually think about it, instead of an affirmative option, like affirmative option would be like you have to give some kind of consent to continually be billed. Some places actually have that by the way, like India for certain subscription amounts. You have to give consent before it's billed if it hits a certain threshold. In the US, there's never been anything like this for the negative option where you don't have to give consent. Starting in like the sixties, seventies era, there was this idea that you could be billed, somebody would send you a magazine or a record and you were just automatically billed until, and this is where that law came in, the 1973 negative option rule, until you actually mailed them something saying you no longer wish to receive this and be billed for it. Which actually makes self serve cancellation seem, or even like call a comcast agent makes it seem pretty convenient compared to mailing something.
[00:06:18] Speaker A: I bet that was a low churn environment right there.
[00:06:20] Speaker B: Yeah, very low. I mean gosh, can you imagine?
[00:06:24] Speaker C: I remember did you guys used to get those like cds in the mail?
[00:06:28] Speaker A: Oh yeah.
[00:06:28] Speaker C: Free Cd every month or whatever.
[00:06:31] Speaker B: You're an old guy Scott, you're showing your age here. I'd get the AOL Cd but I think that was like 3 hours of Internet.
[00:06:39] Speaker C: Yeah, yeah.
[00:06:40] Speaker A: So let's go through the fact sheet that they put out. We'll share all these links in the show notes and make sure everybody has access to these resources. Can even share the actual document if somebody really wants to dig in there. But that's what Nick's for. He's a former lawyer.
[00:06:54] Speaker C: 230 pages.
[00:06:56] Speaker A: Yeah.
[00:06:56] Speaker C: Or 281 of the two.
[00:06:58] Speaker A: Man. Let's see. So the rule for address, you know, the primary focus is to address these common problems. And I'll just go through this and you guys react and kind of point out what you think is most interesting. But sellers that don't tell the truth about or leaving out necessary information, people getting billed on a recurring basis when they didn't agree or wasn't clear that that was going to happen. And then sellers who make it hard or impossible to cancel, which obviously here at Chern Key, that's going to be a big point that relates to us and our business.
[00:07:28] Speaker C: These top three kind of benefits to me, they're targeting clearly the worst offenders. Like I tell the story all the time. It's part of our I think pitch package actually in the early days where I had to fax in an LA fitness cancellation form between certain hours of the day on certain days of the week to cancel. So these three benefits are targeting the worst of the worst. The thing is, everyone gets caught up in it, right? So that's how it goes.
[00:07:58] Speaker A: Yeah, that's a good point. I think about gyms or just maybe car washes, consumer services, kind of non digital first type products or services that probably are the worst offenders here. But that's a great point. This is, in fact, anybody that offers a subscription basically falls into this negative option rule. So we're all going to have to adhere to the same rules regardless of industry, which is pretty interesting.
[00:08:28] Speaker C: And the thing is, just because someone's an offender doesn't mean it's intentional. It may just be because they're really old school.
[00:08:37] Speaker B: I was going to say that, Scott, is. I don't think it's always something that's malice or bad intent. It's more about technological limitations. And if you think about a lot of the physical types of services, Jims is a great example, and there are a number of them that have moved to subscription models recently.
It's more of a technological and business operational challenge where they've got to have some kind of in person sign up. And now I imagine a lot of businesses are kind of shocked. Like, what do we do? Scrambling to try to figure out, well, if we have to have a phone number to cancel, or if you have to have some kind of online portal to cancel, what do we do? Well, you've got to use some software to do that. You've got to have an integration to make sure that happens easily and immediately.
[00:09:22] Speaker A: And I think some of this too is obviously for us, it's going to be a lot of focus on the cancellation process, but there's also just a lot of vague rules about how things need to be presented. Good example here is back when I started zubtitle, which is video editing, captioning, we were the first ones to market. And before that, everybody priced based on per words that had been captioned. So if you used a service, they would charge you, obviously, based on volume. And when we rolled out a subscription that market, no matter how clear we made it, they, everybody just thought they were buying, like, words and word counts, and then we would build them on a second month and they would be like, wait, what is this? They wouldn't under. They didn't really understand the concept of subscriptions.
Surprising to think about these days, but it seems like there's kind of a lot of vague. And Scott, maybe this is you on the UI Ux side of things in marketing that like making sure that it's clear that people are buying a subscription where. Sounds kind of silly to say that in software, but these other industries where maybe the subscription is not the de facto payment method or payment option.
[00:10:32] Speaker C: Yeah. I mean, if you're in an industry that's typically not prone to subscription expansion, then I could see how, I don't know, maybe as a seller, you're timid about that. You don't want to put it up on the billboard. Maybe it's not the main benefit. Bunch of reasons why that can be the case.
[00:10:49] Speaker B: There's an example right now that's pending of exactly how the FTC is thinking about this and how the government is looking at protecting consumers. But the Justice Department suited Adobe recently.
They hid early cancellation fees, and then the consumers were like trapped in these pricey subscriptions. Basically, it wasn't clear that there would be a cancellation fee if you terminated your subscription early. Then all these consumers were getting hit with these cancellation fees. So I think it goes back to clarity in terms of what are you actually signing up for? What is the full scope of that agreement look like in a way that's a easy to understand, and obviously the government is going to go after the largest offenders here. So Adobe Space, one of the biggest subscription companies in the world, I imagine they're making an example here with them.
[00:11:40] Speaker C: Be so good you don't have to hide it in fine print.
[00:11:43] Speaker B: Yeah.
[00:11:43] Speaker A: Yeah.
Most of the questions that we've gotten from customers so far has been just confusion and clarification. I think this concept makes sense. Hey, it should be easy to cancel, but in the fact sheet here says there always has to be a way to cancel that's as quick, as easy as it was to sign up. That language is kind of. Nick, can you unpack that from like a, maybe not legal advice, but from a legal standpoint, what it seems like that could kind of be vague or we could kind of interpret that a couple different ways.
[00:12:16] Speaker B: Yeah, you absolutely can. And I think that's one area if you actually, I know Scott, and I read the, a full 220 page document, and even though I'm an attorney, this is not legal advice. This is the way I see it as a SaaS operator. But rules are often about proportionality. And particularly when you're protecting consumers and you're wanting to ensure fairness, there's this proportionality and expectation setting. You can send to something, and it's easy to sign up and add a card, enter your billing information, and hey, maybe a minute passes, you're subscribed and you're on this negative option, if you will, you know, subscription plan, and then there's this expectation, well, it should be as easy and as high velocity cancel that as it was. So there are differing opinions out there right now based on what I'm seeing in terms of this proportionality. They call it symmetry, and they use examples to illustrate asymmetry. It's kind of like, oh, you know, we're the government, we know when we see it. That's not what companies are looking for. So I guess to add a little more context to the way I'm looking at it, obviously, it'd be really bad if it takes a minute to sign up and 20 minutes to cancel. That's an extreme example where I think it'd be pretty clear that's not symmetrical. That sign up is really fast. The cancellation is really difficult, and maybe a minute to ten minutes, I don't know if they're going to get into these kinds of issues, but I would be very careful about having something that was swayed to one side. The other way that that proportionality symmetry argument comes into play is the medium through which you cancel. So if you have a self serve signup that's digital, that's online, then the cancellation process has to be the same way. And that one is pretty clear that the medium through which you subscribe, if that's the medium through which you subscribe, then you should have a similar medium through which you can cancel.
[00:14:04] Speaker A: That makes sense. Scott, this is kind of a weird thought, but the norm in our industry has always been make it easy, make it super simple. We need more activations, we need more people in the funnel. Right. Ease of use. I wonder if this law could maybe have a little bit of effect where maybe it would make more sense to have a little bit more friction on the front end of the purchasing so that you can then maybe have, you know, you know, not be so rigid on the cancellation process. I don't know. Am I reading too much into it, or do you think that's. How do you think people will kind of react to this from like, a product?
[00:14:39] Speaker C: It's a good thought exercise. I mean, I think historically, I mean, I. Coming from mobile consumer, you learn quickly that people don't read. And if you're presenting them with a CTA, you want to make it as big and colorful as possible and stand out and make it as tappy and tappable as you can. People just want to get through a flow. I think that's years of that has caused mistrust. And this is why we are here now, I think partly. Well, okay, so I will say that if you kind of look at how social apps are developing and how, like iOS, for example, has been developing increasing friction so much in the past few years, like even iOS 18, they basically killed social sharing. You know, like sharing your contacts with, let's say you're signing up for a new social app and you want to connect with your friends. The way, the way you connect with contacts now has destroyed virality, and that's because there's been so much friction inserted over time for these other flows. So I think it seems natural that's.
[00:15:48] Speaker B: Driven by GDPR and other privacy concerns, I'm guessing.
[00:15:53] Speaker C: Yeah, but Apple has always tried to be like, I'm getting back in my old mindset with this, but Apple has always tried to be at the forefront, kind of untouchable and not sketchy or not allow for sketchiness. And so I think that we're coming around to this finally in subscriptions. I think it's a net good for there to be clarity and thoughtfulness and whatnot. But I think it will affect, there is a portion, I think, of subscriptions thats just been gravy. Youre shoveling people into the funnel. I think there will be a material effect downstream because of this.
[00:16:33] Speaker B: I think its already there. If you look at chargeback rates and disputes, thats surging. There are so many of these chargeback type businesses that are there to intercept chargebacks before they hit the reputation of the merchant. And I think that, granted, there's some bad actor consumers out there that just, they use something and then charge back, which is frustrating. But there are a lot of people that you get the free trial and you don't realize it's a free trial. The terms were hidden and you're going to dispute that because it felt unfair. So I think operationally, if you're a business operator or somebody who is concerned about the financials of your subscription business, chargebacks are awful. They hurt your reputation, they result in bad reviews, they result in bad fees to dispute those. And you rarely win a chargeback dispute if you're contesting it through stripe or something. I think having clarity and enforcing clarity at the point of signup, it'll be a huge win because businesses know, hey, I can't do that. I'm in violation of this rule. There are harsher consequences to violating that. But as a result, I'll probably have fewer chargebacks and disputes and, you know, a better online reputation on Trustpilot and.
[00:17:43] Speaker C: What have you and you don't want to build a business on the backs of, like, zombie customers. Right? I mean, you want customers who actually want to be there. So I think this will change the landscape a bit.
[00:17:57] Speaker B: Yeah.
[00:17:58] Speaker C: And in the end, being user friendly, customer centric, is the sustainable way to go. Right?
[00:18:04] Speaker A: Yeah, that makes sense.
[00:18:05] Speaker B: I mean, we, we've talked to a lot of customers too, or they're not customers. A lot of prospective customers. And talking about cancel flows and how easy we make it to cancel, how it's all there to facilitate a healthier relationship between a business and their customers long term. And we know that to be true. But then we get pushback sometimes with the prospective customer. They're like, whoa, whoa, whoa. We don't have a self service signup. Why would we add that? Cause then we're gonna have more people cancel. It's like, well, why would you have more people canceling? Oh, well. And then they get kind of, you know, all mealy mouth.
[00:18:36] Speaker C: It's too easy to cancel.
[00:18:38] Speaker B: They get all mealy mouth and they're like, well, because it's hard to cancel is essentially the problem. And then that, like, means, okay, we'll get them for extra month because they got to call this line or fax this thing in.
[00:18:48] Speaker A: Delaying the inevitable, they're delaying the inevitable.
[00:18:51] Speaker B: And they're frustrating customers. And I think that's the kind of situation where everybody benefits here. And if you're a competitor to one of those other companies, it's like, well, it's unfair that they're doing business in a way that is a little deceptive. So I do think it evens the playing ground a little bit in that regard.
[00:19:13] Speaker C: And I think, too, what is frustrating to see is that the practices of the subscription industry as a whole have kind of forced the government's hand here because the relationship between subscriber and company has become so adversarial that you needed, depending on your perspective, you either didn't or did need some intervention. Intervention has happened, and here we are. So hopefully this can kind of reset. We don't like to see customers at odds with the company they're subscribing to. It's a relationship, right?
[00:19:53] Speaker A: Yeah.
[00:19:54] Speaker C: And relationships change and morph and needs change, and that should be the reality versus, like, I'm automatically going to charge back, right? Or I have to be on guard all the time.
[00:20:06] Speaker A: Yeah, yeah.
Nick, before this ruling came out, the other bit of news which has happened, happened a while ago is California has their own legislation. So there we now have this paradigm where states are making regulations or legislation in their case that trying to put parameters around protections for consumers within subscriptions. But now we have the federal ruling. Just explain to people the difference between those.
What can we expect if this goes through in six months with the FTC? Would we expect states to continue to deliver their own? Orlando, what do you think is going to happen from the political side of things?
[00:20:49] Speaker B: Yeah, well, not the I don't know how to weigh in on the political side, government state. Yeah, we'll know in a few weeks. I don't know when this thing's going to drop, but it could be more clarity after the fact. But yeah, I think the landscape is.
One good thing about the FTC having a rule is that it applies broadly across the US and you don't have to deal with all of these different rule tests across different states.
Imagine the scenario where every state, it's kind of like the sales tax issue, which is extremely frustrating, where you've got this nexus requirement in every state. Like do we hit this or not? It's so complicated. It's so difficult to adhere to all these different state laws. As a business, it's expensive to do that in one regard. Like having this rule that's broadly applicable to the US is helpful there. In some ways, it's very similar to the rule that California has proposed. California may be a little more protective over consumers than this rule ends up being when it goes live. I think that one was from back in 2022. So that one's been around for a while. And a lot of similarities like that one required simple cancellation mechanics. You had to have online cancellations available, cancel through the same method medium. There was even something about pre renewal reminders, I think, in that, but I forget exactly how that one came out. So, yeah, I think the short version is this rule is probably enough for most states that were on the fence about it. And they could, let's say that this rule ended up being overturned based on who wins the White House. And this rule never sees the light of day in an official form. Then many states might say, hey, we're going to go ahead and adopt the rule as the FTC released it, and then we could have a situation where you've got to adhere to all these different state specific regulations.
[00:22:47] Speaker A: So that's a good point to bring that up about the election. So we are 1819 days from the election, something like that. And this ruling, just to be clear, this is, do you call this proposed changes?
[00:23:05] Speaker B: This is the rule as it will be. They had a proposal which was far more overreaching, in my opinion, overreaching than the current form. And they got a lot of pushback from the industry, a lot of commoners. Really interesting footnotes throughout, but this reflects a balance where they cut some things. And this final rule will take effect 180 days after it's published to the Federal Register, which should happen in the next week.
[00:23:31] Speaker A: Gotcha. Okay.
[00:23:31] Speaker B: So it wouldn't be effective until that day passes.
[00:23:36] Speaker A: Gotcha. So we still have some time for it to be formally filed. And that's when the countdown starts to 180 days. But there is a potential, let's say Trump wins the election.
It's possible that based on who is put into office in his administration, that this could get repealed or stopped. It's possible, yeah.
[00:23:58] Speaker B: I mean, if Elon Musk, what's the department head he's creating, he's going, yeah.
[00:24:02] Speaker A: The doge department of government efficiency.
[00:24:06] Speaker B: Yeah. I guarantee you. Well, I don't guarantee, I don't guarantee anything here. Scott's got no comment. But I, I mean, if that happens, like, I don't think that the rule would see the light of day.
[00:24:17] Speaker C: Well, so there is some complexity. I forget the rules on how you replace members of the FT, of the FTC board. Was it the board of commissioners or whatever? Isn't it currently three, two. Damn repub so, yeah, yeah. I don't know if it's a Senate confirmation or anything. So it gets into all that complexity and then it would have to be repealed by the FTC if they're replaced.
[00:24:44] Speaker B: Right, right. There are a lot of steps that would have to happen.
[00:24:48] Speaker C: Yeah.
[00:24:49] Speaker B: And there's a chance that it does, you know, it's not effective. There's the chance. But I think the more likely scenario is this is out there now.
There's going to be pressure on a state level, at the very least to start protecting their own constituents. So it's something that businesses should start to adopt and be prepared for because you wouldn't want to be out there in May and June scrambling last minute to figure out what youre going to do to enable self serve cancellation.
[00:25:22] Speaker A: Trey lets zero in on that point. Then what should people be doing to prepare, assuming that this continues and does go into effect in around 180 days? Scott, can you start with a short list of what people should be thinking about? Doesnt sound like anybody needs to panic at the moment, but it is time to start thinking about it.
[00:25:45] Speaker C: Yeah, for sure. You got to start, get the wheels turning first is like an operations update where you've got to process that cancellation right away.
No more of this. It's the classic whenever you unsubscribe from a mailing list. We might process this in the next six months. No, sorry. This is serious. Cancel it. Cancel it now. It's done. Second is surface. This stuff in the UI, don't be afraid of it. And then make it reasonable and just personable. You have some room, I think, based on the signup process to collect data here and surface offers. So that's one thing that the FTC declined to put in their role. They were considering not allowing any retention offers that is allowed. So started thinking about that.
Yeah, that's where I'd start.
[00:26:44] Speaker A: Nick, can you follow along on that? I know that the offers is a good point that were in one of these revisions previously but were taken out in the final ruling. What else? Just so people know, I think maybe there could be people that think more is in there than actually is. What are some of those notable things that came out at the last minute and what's the implications of those?
[00:27:08] Speaker B: Yeah, I mean, that was definitely a big one. To Scott's point around the idea of they call it saves, that was what they referred to it as. And there was language around it said something to the effect of you have to opt in to receive any kind of marketing save offers. And you know, like, well, I'll talk about what we know about that separately. They get a lot of backlash for that because there are a lot of things that are really important to let somebody know about when you're canceling. So let's say in the long 220 pager they had a alarm company that had made comments and imagine that somebody is breaking into a home or planning to break into a home and goes and tries and cancels. I mean, that's a terrifying thought. Right? And there are a lot of other industries and companies we work with wherever. If you're going to cancel, there could be immediate repercussions to either your business or what you have access to as a consumer that could really impact you in a negative way, and you need to be aware of that. And then there are also these other occasions where maybe you don't actually want to cancel. You just don't know what to do with your subscription because it's not a good fit for you anymore. And there are other options that fit you better as a business.
The FTC was wise to actually listen to those comments and see that there are all of these different cases where it doesn't have to be overburdensome to offer somebody something to stay. It's very proportional to that. Easy signup process. Takes 5 seconds to look at an offer and say, well, does this make sense for me or does it not?
So I think that was the biggest one and I think that was the right move there. I don't think the FTC will ever go as aggressively as California and you can look to the California law and they don't have that. So I think that's another way to look at it is that not only was that removed, but it's unlikely that they would ever put that back in once it's made it to this point.
[00:28:58] Speaker C: That's a great point. And I think too, on top of that, this is a chance for businesses to lean into this pretty hard. You can rethink how you staff your teams, how your teams are oriented, how your operations work, how you can use this to reset a relationship versus make it a confrontational one. You can get really efficient with this. It may be a blessing in disguise.
[00:29:22] Speaker A: For a lot of companies.
[00:29:23] Speaker C: Right?
[00:29:23] Speaker B: Yeah. Have you guys thought about the business impact there? To piggyback on Scott's point, let's say that you have a large vertical b, two B SaaS, and you have a lot of self serve signups come in, they subscribe and they want to cancel. Today, a lot of those businesses have a CSM, some kind of customer success manager, and they would need to be called or somebody on their support line would need to be called or there need to be some kind of chat there. What do you think is going to happen to those jobs where that's like a big part of the job is actually processing and handling cancellations manually and then like the broader impact for those businesses that have a reliance on that to actually save customers?
[00:30:04] Speaker A: Yeah, that's a good question. I mean, on one hand you could require a chat to start a subscription. Then you call it like a sales process.
So that that changes kind of the, kind of the beginning of the relationship, which based on this ruling means that you could have this, you know, continue that same process, but that could be more headcount, that could be new operations, you know, very different environment. So I don't suspect that that will be the case. My first thought just goes to their automation. Maybe there's been potential for virtual agents AI chat to maybe help process these things faster, which is definitely something that we've looked at here at Turnkey to help speed up the, and improve the cancellation process. So those are the two things that come to mind, but that would still violate the rule. Yeah, that's true.
[00:30:53] Speaker B: Even as creative as you can get with, like, automating it. If it's an AI rep or a personal rep. I think the language is pretty clear that, like, you shouldn't have to be waiting on some agent or person, be it a bot. You can't even tell these days if it's a bot or a real person. You know, chat with intercom. Please cancel. Yeah, like, it's got to be totally self serve. And, yeah, it's. That part is. Maybe there is room for interpretation there. I could be wrong, but it does seem to me like it'd be better to err on the side of just, like, pulling that out.
[00:31:26] Speaker C: Yeah, it is on the, on the, on the comical side, it's kind of gonna be funny to see how some people try to get around.
I think it'll be. We should start like a vault of examples.
[00:31:43] Speaker A: Yeah, yeah.
[00:31:44] Speaker C: Finding examples.
[00:31:45] Speaker B: Back to that 220 pager they said. That is why they're not giving you a bright line test on what is a symmetrical cancel process. As big as people will take advantage of that. Businesses will find loopholes and get around it. So they erred on the side of being a little broader and just saying symmetry, like, we know it when we see it. But it is. Businesses are really adapt at moving through new regulation and finding ways to keep things moving.
[00:32:11] Speaker A: So let's talk a little bit about enforcement. What do we expect to see from the FTC after this goes live? And are they going to be just throwing fines out left and right? Are they going to be targeting, you know, large customers who make examples? What's the thought as far as, like, what we'll see from like, an actual enforcement standpoint, short term?
[00:32:33] Speaker B: Scott, do you have any thoughts there?
[00:32:35] Speaker C: Fines. On fines. On fines? Yeah, I mean, I had some research open about kind of like, enforcement action history over the past five years or so. And typically, Nick, you probably know better than I do, but they try to make a few example finds example cases out of this to show it has teeth, and then, you know, they're kind of like the bad kid getting detention or something.
[00:33:02] Speaker B: I don't know. That's my best answer. I don't know what this will look like in terms of enforcement. And often you don't know how aggressive the government's going to be until you know, well, who's in office, who's heading things. But for a lot of work, you know, there has to be enforcement. There has have to be teeth to it. I do suspect that there will be a lot of challenges to this. So as they start to go after enforcement.
There will be challenges. There will be challenges using Chevron deference, which was the Supreme Court case from this past summer, about agency rulemaking, power and authority. But those take one or two years to even make it through before it's handled. So you don't have time to wait on the Supreme Court. It's never a good business decision, by.
[00:33:43] Speaker C: The way, wait on the Supreme Court.
[00:33:44] Speaker B: To tell you what to do, or the government, for that matter. So, yeah, I don't know. It'll be interesting to see how it unfolds. I suspect that they'll pick some of the worst offenders first and maybe some of the larger companies, but I wouldn't want to bank on that either. As a business, I'd want to make sure all my ducks were in a row and I was ready to be compliant.
One other interesting thing I wanted to touch about, I'm getting choked up here I wanted to touch on is, Scott, I don't know if you saw when you were reading through, but they have this idea around the cost to implement.
[00:34:14] Speaker C: Yeah.
[00:34:15] Speaker B: And it's just so clear that, like, the government is so horrible at estimating what things actually cost to do, and maybe that's why we run such a huge deficit and are racking up so much debt. It's these things they, quote, end up costing way more. But they were like, we estimate that updating your cancel mechanism or adding, this is going to be between $45 and $360. And I'm like, how on earth do you come up with that? Talking to one of your engineers about this idea is going to cost that much? There's just this total reality distortion field within the government where it's like, yeah, it should only cost 45 95 at the low end to implement this.
[00:34:59] Speaker C: Yeah, I think they were pricing like an entry level engineer, and it should take only an hour to do this. And in certain cases, and it's like, I mean, that's the most optimistic projection I think I've ever seen.
Software estimation. Right.
[00:35:19] Speaker A: Well, for anybody that doesn't know turnkey, we solve this problem and it's not going to be dollar 45, but we can definitely help and make it very economical and make sense with actually saving customers.
[00:35:31] Speaker C: That was a smooth transition.
[00:35:32] Speaker B: Yeah.
[00:35:32] Speaker A: Nice little plug in there, wasn't it?
[00:35:34] Speaker C: Yeah. Yeah.
[00:35:35] Speaker B: We can also tell you what we see it cost to actually build this in house and do it well at scale with all the compliance needs and things like that.
Just humorous that the government figures out.
[00:35:49] Speaker C: Well, yeah, the compliance overhead is becoming real. I mean, just how we were talking about don't wait on the government. Well, it works both ways too, where suddenly you've got, I don't know, six different state law compliance requirements on cancel flows next year. I mean, that could happen too, right?
So planning ahead in a certain way is, I think, in everyone's best interest, even if it is just surfacing a straight up cancel button that just does its job right away. I think the goodwill you'll engender from customers will, will go a long way and it'll help you. Bonus avoid fines.
[00:36:32] Speaker A: Yes. It'd be a good opportunity for us to talk more about the advantages of having a cancellation button because like you were saying earlier, Nick, there's a lot of companies that are scared to put a cancellation button up because they're worried it's going to just have affect their churn so drastically. And, well, a lot of times it does. You are cleaning out those zombie customers that are staying around just because they're indefinitely going to leave. But what we find is when customers install a really, really well done, sophisticated cancellation flow that's personalized and has great offers and good segmentation and copy, you wind up saving a lot more customers in the long run. And then it's much easier to reactivate those customers that do leave because they have a good experience and you have the right information about them and why they left, what offers they looked at or didn't look at. So it would be a good opportunity for us to educate the market on why this is such a good thing to do from a retention standpoint. Overall, yeah.
[00:37:29] Speaker B: I mean, we realized that when we were building our last company and we didn't really have a good sense of why people were canceling in the first place. It's like, all right, well, we got these customers, we're providing value and then they leave. Okay, is that just the nature of doing business?
At minimum, if you're able to just collect quick point of feedback easily in 5 seconds.
Number one, you can build a better product for them when they come back or for your existing customers. And number two, maybe they don't really want to cancel. And a lot of times when we found just from studying millions of these cancel sessions and even talking to end users, consumers want flexibility. And often there's some value mismatch. And if you can find, you know, the right reason to help them stay that meets them in the middle, then you're doing right by them as a business. They're going to be happier long term. And if they don't want to continue and there's not an appealing offer, then you know they'll leave. And it was easy. They could do it in less than 20 or 30 seconds, and they'll probably be back at some point in the future if you offer a really good service.
[00:38:32] Speaker A: And, Scott, I mean, you would agree that, I mean, the best companies have a great experience on the cancellation side. They're not putting in dark patterns to prevent cancellations. And this seems like this ruling is really just catching up with best practices that are really already kind of unspoken or there's no rulebook anywhere, but this is kind of catching up to that. You agree with that?
[00:38:55] Speaker C: Yeah, I mean, it's a good point. I mean, when we started doing this, people looked at us like we were crazy because it's like a dusty corner of your settings, part of the app. Right.
[00:39:07] Speaker B: I.
[00:39:08] Speaker C: Designers hate designing that stuff. Billing departments really don't care. It's just nobody wanted to deal with it. There were some pioneering, we'll call them pioneering patterns on the Amazon and Adobe side that were interesting but ultimately felt unsatisfying because there was something missing in the sense of, is this right? Is this as customer centric as it could be? So I think you're right, though. I think ultimately it's just 2024. Let's have a standard, uniform process for this stuff. If you're creative as a business, it's a chance to innovate a bit, and then let's all move on. Subscriptions continue to eat the world, and I think that's a response to that.
[00:39:55] Speaker A: Yeah. And Nick, I think for anybody that's stressed about this out there, we've seen these things happened in the past. I think the tax compliance is a good point in the software industry, GDPR comes to mind.
There's been other rulings and laws that have gone to effect, and generally vendors step in to help fill the gap, which is obviously what turnkey does. But this isn't just put people's minds at ease that this isn't something we haven't dealt with before from a general sense.
[00:40:28] Speaker B: Yeah. I mean, and this is going to keep coming up. There's always going to be areas where government sees an opportunity to regulate and to drive a certain type of behavior. And this is the latest, I think the state based tax compliance was one that was a big one. And there was a lot of fear mongering, and we don't want to be fear mongering at all with turnkey and scaring people into using our software. And you look at with the tax compliance thing and there were whole businesses that were built scaring you. You're going to be sued by all 50 states due to tax non compliance. And it turned out that like, there was a lot of nuance and complexity to that. And for a lot of businesses it was destructive in terms of time and the cost to handle that compliance, and they didn't even meet nexus requirements. There was another one that came out, out of Canada, I believe it was called the Ontarians with Disabilities act back in like 20, 1617 era. And that one turned out not to be enforced heavily. But a lot of businesses expended tons of capital on that and new businesses popped up to try to address that. GDPR is the biggest. That actually impacts people with the annoying cookie banners that everybody hates, the cookie banners. You spend more time dismissing cookie banners than you do navigating a trinky Ancill flow, by the way. But yeah, it's the reality of doing business in the world we live in today that's highly global. There's so much jurisdictional complexity. By the way, we haven't even talked about the laws out of the EU. You know, Germany's got law, France has a law. The EU is looking to pass one in 2026, not too dissimilar to what we're talking about here. So it's just going to. It's going to keep coming. And I think the right thing to do is go ahead and use some of it is common sense. You know, you as a consumer, what would you want to have you as a subscriber, what would you want to have?
And then just making sure that you've got the right experts to help walk you through it. It's not expensive to do that. In fact, you'll actually probably make more money doing cancel flows the right way than you would not having them at all. We know that to be a fact. So without getting into a sales pitch, I think I'll stop there.
[00:42:35] Speaker A: Nice. Yeah, no, that's good. I know we would sit here and talk about cancellation flows and this ruling for hours, but I think we got the people what they need. So, I mean, aside from subscribing to this podcast, because we will be having episodes on this as changes happen, or over the coming months and then probably a big episode before it actually goes into effect 180 days from now.
[00:43:04] Speaker C: Preston, we should talk about the California law in depth and the EU law and all that. Yep, lots to come.
[00:43:12] Speaker A: Subscribe to the feed wherever you get your podcast, and we'll keep you up to date on everything as it happens. But just quick, quick hitters on the way out. What's your parting advice for people? As of today, we get some good.
[00:43:24] Speaker B: Blog posts out there, quick, easy to use checklist again. And none of this is designed to be legal advice. It's really just helping direct you to compliance as we see it. And I think we've got a good assessment of how the landscape is shifting, so maybe we'll include that in the show note. Baird.
[00:43:43] Speaker A: Yep. Yeah, we'll put all that in the show notes. And we'll put timestamps on the YouTube for those watching the actual video stream so you can go back and reference it and put any and all your questions as well into YouTube. Or you can also email us. We would love to hear more of your questions and concerns around this topic so that we can help address those.
I know we've talked to plenty of our existing customers, but if you don't even use turnkey and have concerns or questions about this that we can cover and help clear up, we'll be happy to do that.
[00:44:16] Speaker C: This affects free trials, too, so we have a piece of that.
[00:44:20] Speaker B: That's probably one that we should definitely dive into because that's that type of segment is going to be impacted more than most of the others. So we should do it on that as well. Or at least make ourselves available. If you are running a subscription company and you've got more questions, happy to chat with you and kind of explain the way we're seeing it and maybe talk you through your specific scenario and how we could help with that.
[00:44:49] Speaker A: Great Scott. You got anything else before we.
[00:44:52] Speaker C: Yeah, I just say go start going through your signup flows and your cancel flows and if you got them, if you don't, you need them. Start with the basics. You need them, but this affects your signup process. To start getting those, I like to kind of like screenshot them and put them on the board in order and just see what you got.
[00:45:12] Speaker A: Visualize them, go through them. Yeah, it's a good point. We're gonna be a lot of focus on the cancellation. We can't forget the other side of it's affected. Awesome. Thanks, guys. This is good. Let's keep up with the news as it changes and come back and drop episodes as needed.
[00:45:27] Speaker B: Cheers.
