FTC's New Rule Will Require Companies to Make Subscriptions Easier To Cancel

Key Takeaways

• The Federal Trade Commission (FTC) is implementing its “click-to-cancel” rule, which will require sellers to make it as easy to cancel a subscription as it was to sign up.
• The FTC will update its 1973 Negative Option Rule after receiving more than 16,000 complaints from the public about subscription services' unfair practices.
• Companies will be prohibited from using negative option marketing practices, such as misleading marketing and charging additional fees unless the consumer explicitly cancels them.

After more than 16,000 complaints from the public, the Federal Trade Commission (FTC) is implementing a “click-to-cancel” rule, which will require sellers to make it as easy to cancel a subscription as it was to sign up.

The FTC's 3-2 decision came after the agency said it had received increasing complaints over the last five years about subscription services' practices. The commission said it recieved an average of nearly 70 such complaints daily in 2024.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Chair Lina Khan said Wednesday. “The FTC’s rule will end these tricks and traps, saving Americans time and money."

The regulatory agency’s latest rule applies to almost all negative option marketing, which the FTC describes as any action by a company to interpret a customer's lack of action as agreeing to be charged for goods and services. For example, subscription services will continue to charge customers a monthly rate until the customer cancels the subscription.

this new rule is part of the FTC’s continuing review and modernization of its 1973 Negative Option Rule. 

Plans Continue Unless Explicitly Canceled

Negative option marketing includes prenotification and continuity plans, which offer additional goods or services to consumers and charge them unless they explicitly reject the offer. The rule also applies to free trials, which automatically charge the consumer at the end of the trial unless action is taken, and automatic renewal policies.

Most of the final rule’s provisions will become effective 180 days after it is published in the Federal Register. Once effective, sellers are prohibited from:

• Failing to provide a simple “click-to-cancel” option;
• Misrepresenting material facts while marketing;
• Failing to clearly disclose terms before obtaining a consumer’s billing information; and
• Failing to obtain a consumer’s consent to a negative option feature before charging.

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