The Federal Trade Commission (FTC) has finalized a “click to cancel” rule to simplify the process for consumers to terminate subscriptions. This regulation will apply to most sellers of negative option programs—contracts that assume consumer consent unless actively declined, such as auto-renewing subscriptions. The rule mandates sellers to obtain consumer consent for subscriptions, auto-renewals, and free trials, along with providing a cancellation process that is as straightforward as the sign-up process.
The regulation prohibits sellers from misrepresenting material facts in marketing, failing to disclose terms before obtaining billing information, not acquiring explicit consumer consent before charges, and not offering a simple cancellation method. Additionally, the rule prevents sellers from requiring consumers to cancel through chatbots or agents if initially subscribing through an app or website. Companies must also allow cancellation via phone or online for in-person sign-ups.
FTC Chair Lina Khan commented that businesses often create obstacles for subscription cancellations. The new rule aims to eliminate these hurdles, benefiting consumers by saving time and money. The rule is set for implementation 180 days post-publication in the Federal Register.
Originally proposed in March 2023, the rule underwent revisions after a public comment period, during which over 16,000 responses were collected from various stakeholders. Consequently, certain provisions, like mandatory annual consumer reminders and restrictions on discussing subscription modifications, were removed from the final version.