FTC announces new ‘click-to-cancel’ rule to make subscriptions easier to cancel

The U.S. Federal Trade Commission (FTC) has announced a “click to cancel” rule to make it easier for consumers to end subscriptions.

The “click to cancel” rule will force subscription sellers and companies to make it as easy to cancel a subscription as it was to sign up in the first place.

Provided there are no legal challenges to the rule, it will go into effect in the U.S. in 180 days.

No American should have to worry about being tricked into buying subscriptions and memberships – or staying in either against their will.

Today, my Administration is taking action to ensure folks don't have to jump through hoops to cancel them. https://t.co/3TJFi362vh

— President Biden (@POTUS) October 16, 2024

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said Commission Chair Lina M. Khan. “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.”

Last year the FTC investigated Adobe over its challenging cancellation process, and Amazon for using deceptive tactics to get users to sign up to Amazon Prime.

There are four main points to the new “click to cancel rule”. To understand them, it’s important to know what a ‘negative option feature’ is – a contract provision that allows a seller to interpret a customer’s inaction as acceptance of an offer. For example, automatic renewals where a service continues until a customer actively cancels, or free-to-pay plans where a free trial becomes a paid one unless a customer cancels.

• Important information must be truthful, clear, and easy for customers to find
• People must know what they are agreeing to before signing up – and sellers must be able to show that people knew what they agreed to before signing up
• There must be a way to cancel that is as easy as it was to sign up, e.g. online cancelations must be easy to access and not require customers to go through chatbots or agents; anything agreed to in-person must provide an online and phone cancellation option
• Charges must immediately be stopped on cancellation

The FTC decided to scrap additional elements of the rule that would have required companies to provide annual subscription renewal reminders. It also did not include a rule that banned sellers from giving plan modification info to customers trying to cancel without first asking the customer if they wanted to hear about them.

Featured image credit: Ideogram

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