The rule is designed so that if consumers signed up online, they should be able to cancel in the same number of steps
The Federal Trade Commission (FTC) has announced a groundbreaking “click-to-cancel” rule, aimed at making it easier for consumers to cancel recurring subscriptions and memberships. The new rule mandates that sellers must make the cancellation process as straightforward as the initial sign-up. It will apply to most negative option programs, addressing concerns about deceptive practices in subscription marketing.
The rule goes into effect 180 days after being published in the Federal Register.
Commission Chair Lina M. Khan emphasized that the new rule aims to eliminate the “tricks and traps” businesses use to complicate cancellations, saving consumers time and money. The FTC’s updated regulation modernizes the original 1973 Negative Option Rule, adapting it to the digital economy, where consumers frequently face recurring-payment programs.
The click-to-cancel rule establishes a consistent legal framework that prohibits sellers from:
Misrepresenting material facts in marketing goods or services.
Failing to clearly disclose material terms before obtaining billing information.
Charging consumers without their express informed consent.
Lacking a straightforward mechanism to cancel recurring payments immediately.
The rule was shaped by over 16,000 public comments, reflecting concerns from consumers, government agencies, and advocacy groups. Initially proposed in March 2023, the finalized rule received a 3-2 Commission vote. Notably, certain provisions were dropped, such as the requirement for annual reminders and restrictions on retention offers during cancellation requests.
With these changes, the FTC aims to protect consumers from unfair practices while recognizing that subscription services can be convenient if conducted fairly.
