The Federal Trade Commission (FTC) has finalized a new “click-to-cancel” rule aimed at simplifying the cancellation of subscriptions, memberships, and other recurring-payment programs for consumers. The rule, announced today, is part of the FTC’s ongoing efforts to modernize regulations related to negative option marketing and will take effect 180 days after its publication in the Federal Register.
FTC Chair Lina M. Khan highlighted the significance of the new rule, stating, “Too often, businesses make people jump through endless hoops just to cancel a subscription. The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
Overview of the Rule
The newly adopted rule will require sellers to make the cancellation process as easy as the initial sign-up. This applies to almost all negative option marketing programs across various media, including online platforms. Negative option marketing refers to practices where consumers are enrolled in a service or subscription that renews automatically unless they take action to cancel.
In addition to making cancellations easier, the rule includes the following provisions:
- No Misrepresentation: Sellers are prohibited from misrepresenting any material fact when marketing goods or services with a negative option feature.
- Clear Disclosures: Sellers must clearly and conspicuously disclose all material terms before obtaining a consumer’s billing information.
- Informed Consent: Sellers must obtain a consumer’s express informed consent to the negative option features before charging them.
- Simple Cancellation Process: Sellers must provide a simple mechanism for consumers to cancel their enrollment and immediately stop any future charges.
Rule Modifications Following Public Input
The finalization of the rule follows the FTC’s review of public comments submitted after a notice of proposed rulemaking was issued in March 2023. Over 16,000 comments were received from a wide range of stakeholders, including consumers, government agencies, consumer advocacy groups, and trade associations.
Based on the public feedback, the FTC made several notable adjustments to the rule. One key change was the removal of a provision that would have required sellers to send annual reminders to consumers about their negative option subscriptions. Additionally, a proposed prohibition on sellers suggesting plan modifications or reasons to stay enrolled during the cancellation process was also eliminated. However, sellers must still ask consumers whether they wish to hear such offers before presenting them.
Growing Concerns Over Negative Option Marketing
The FTC has been addressing concerns related to negative option marketing for years, as complaints about misleading subscription practices have grown. In 2024, the Commission received an average of nearly 70 consumer complaints per day regarding negative option programs, a significant increase from 42 complaints per day in 2021. Negative option programs can be convenient for consumers and businesses alike, but the rise in complaints reflects growing dissatisfaction with the difficulty of canceling such services.
The rule aims to create a consistent legal framework to curb deceptive practices, ensuring consumers have better control over their subscriptions and can exit programs without unnecessary hurdles.
Dissenting Votes and Statements
The final rule passed with a 3-2 vote among FTC Commissioners. Commissioners Melissa Holyoak and Andrew N. Ferguson voted against the rule. Commissioner Rebecca Kelly Slaughter issued a separate statement in support of the rule, while Commissioner Holyoak submitted a dissenting statement outlining concerns. Commissioner Ferguson’s dissenting statement is expected to be published at a later date.
FTC Resources and Next Steps
In addition to the rule announcement, FTC staff, led by Katherine Johnson in the Bureau of Consumer Protection, has developed a fact sheet summarizing the key changes and provisions of the new rule. This resource will help businesses and consumers better understand the updated requirements and ensure compliance.
The FTC’s “click-to-cancel” rule represents a significant step forward in consumer protection by making subscription cancellations more accessible and transparent. As businesses prepare for the rule’s implementation, consumers can expect a more straightforward process for managing and canceling their recurring services in the future.
