(Alexeynovikov via Getty)
A new rule from the Federal Trade Commission will force companies to make it easy for consumers to cancel their subscription services as it was to sign up.
On Wednesday, the FTC announced it had finalized the Commission’s “click to cancel” rule, with most of the provisions slated to take effect in 180 days.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said Commission Chair Lina Khan. “The FTC’s rule will end these tricks and traps, saving Americans time and money.”
In a blog post, the FTC said the rule will bar vendors from forcing consumers to talk to a live or virtual representative to cancel a subscription if it wasn’t required during the sign-up process.
“If you’re offering phone cancellation, you can’t charge extra for that service,” the Commission said, adding: “If people originally signed up for your program in person, you can offer them the opportunity to cancel in person if they want to, but you can’t require it.”
(Pheelings Media via Getty)The rule arrives over a year after the FTC announced its proposal to crack down on hard-to-cancel subscriptions services, with the proceeding attracting more than 16,000 comments from consumers, government agencies and trade associations.
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The bulk of the finalized click to cancel rule actually targets another, sometimes shady, business practice called “negative option programs,” or when a seller keeps charging your credit card simply because you failed to take action on your subscription. This can often occur when a company starts charging a user for a full subscription after a “free trial” period ends because no action was taken to cancel.
Although negative option programs can help consumers explore new products, the FTC also called them out as a potential way to trick users into paying up. “Consumers cannot reap these benefits when marketers misrepresent material facts, fail to make adequate disclosures, bill consumers without their consent, or make cancellation difficult or impossible,” the Commission said in the finalized rules.
“The FTC receives thousands of complaints about negative option and recurring subscription practices each year,” the Commission added in Wednesday’s announcement. “The number of complaints has been steadily increasing over the past five years and in 2024 the Commission received nearly 70 consumer complaints per day on average, up from 42 per day in 2021.”
In response, the click to cancel rule also forces companies to be upfront about their free trial offers and other plans that feature automatic renewal. “All this information should be clear, conspicuous, and available to your customers before they enroll,” the FTC added. “And certain key information related to charges and cancellation must appear right when and where the customer agrees to the negative option, every time.”
In addition, companies must obtain proof of consent, such as requiring the user to click a checkbox, when asking people to sign up for negative option programs.
Companies found in violation of the rule risk facing civil penalties from the FTC, which could sue for damages to compensate affected consumers. The click to cancel rule is also designed to work alongside any state laws that require more protections for consumers. California recently signed its own click to cancel rule, which takes effect in July.