The Federal Trade Commission (FTC) has introduced a new "click-to-cancel" rule aimed at simplifying the process for consumers to terminate recurring subscriptions and memberships. This rule mandates that sellers must make cancellation as straightforward as the initial sign-up process. Most provisions of this rule will become effective 180 days after its publication in the Federal Register.
FTC Chair Lina M. Khan commented on the need for this regulation, 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."
The updated rule targets nearly all negative option programs across various media platforms. It prohibits sellers from misrepresenting material facts during negative option marketing, requires them to disclose essential information before obtaining billing details, and mandates informed consent from consumers before any charges are made.
This final rule is part of the FTC's efforts to modernize its 1973 Negative Option Rule, addressing unfair or deceptive practices related to subscriptions and recurring payments in today's digital economy. The decision follows a March 2023 notice of proposed rulemaking that garnered over 16,000 comments from diverse stakeholders including consumers, government agencies, consumer groups, and trade associations.
Negative option marketing can be convenient but has led to numerous complaints received by the FTC annually. In 2024 alone, nearly 70 complaints per day were reported on average, compared to 42 daily in 2021.
The final rule establishes a legal framework prohibiting:
- Misrepresentation of material facts during marketing with negative options.
- Failure to clearly disclose terms before obtaining billing information.
- Charging without express informed consent.
- Lack of an easy cancellation mechanism.
Following public feedback evaluation, the FTC voted on adopting the final rule with some modifications. Notably removed were requirements for annual reminders about negative options and restrictions on discussing plan modifications during cancellation inquiries unless requested by consumers.
The Commission's vote was narrowly passed at 3-2 with Commissioners Melissa Holyoak and Andrew N. Ferguson dissenting. Commissioner Rebecca Kelly Slaughter issued a separate statement while Commissioner Holyoak provided a dissenting opinion.
Katherine Johnson from the FTC’s Bureau of Consumer Protection is leading this initiative. The FTC continues its mission to promote competition and protect consumers against frauds and scams.
For more information on consumer protection topics or to report fraudulent activities, visit consumer.ftc.gov or ReportFraud.ftc.gov.
