FTC Sets Final “Click-To-Cancel” Rule For Subscriptions, Including Streaming

The Federal Trade Commission today announced a final “click-to-cancel” rule requiring sellers to make it as easy for consumers to cancel their enrollment as it was to sign up. Most provisions will go into effect 180 days after it is published in the Federal Register, or from today. The 230-page rule runs the gamut from streamers to cable TV subscriptions to home shopping networks and gym memberships.

“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.” The FTC said it acted after receiving more than 16,000 comments from the public.

The Commission’s updated rule applies to so-called “negative option” programs in any media. It prohibits sellers from misrepresenting material facts while using negative option marketing; require sellers to provide more information before obtaining consumers’ billing details and charging them; and require sellers to get consumers’ informed consent to the negative option features before charging them.

Negative option offers come in a variety of forms but, as described by the FTC, share a central feature. They all contain a term or condition that allows a seller to interpret a customer’s silence, or failure to take an affirmative action, as acceptance of an offer.

Negative option programs generally fall into four categories: prenotification plans; continuity plans; automatic renewals; and free trial conversion offers.

The final rule announced today is part of the FTC’s ongoing review of its longstanding Negative Option Rule, which the agency said it is modernizing “to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs in an increasingly digital economy where it’s easier than ever for businesses to sign up consumers for their products and services.”

The rule also addresses online cancellation, requiring sellers to provide a cancellation mechanism over the same website or web-based application the consumer used to consent. The Commission said that “thousands of public commenters repeated the mantra: “If you signed up online, you should be able to cancel online,” noting they often face hurdles finding a cancellation mechanism, and then must call and spend significant time on the telephone to cancel their subscriptions.”

The simple cancellation mechanism must be easy to find. “Consumers uniformly opposed having to engage with a representative to cancel when they could simply click a button to enroll. They also expressed deep frustration over having to hunt to find cancellation mechanisms, usually buried deep within a website or in fine print on a bill or other correspondence.”

Specifically, the Commission said, “the cancellation mechanism must be easy to find at the time the consumer decides to cancel. Providing an easy-to-find mechanism at consent does not mean the mechanism will be easy to find later when the consumer wants to cancel.”

Commission approval and publication follows the March 2023 announcement of a notice of proposed rulemaking after receiving thousands of complaints about negative option and recurring subscription practices each year. It said the number of complaints has been steadily increasing over the past five years. In 2024 the Commission received nearly 70 consumer complaints per day on average, up from 42 per day in 2021.

“The Commission commenced this proceeding because it had reason to believe unfair and deceptive negative option practices are widespread in the marketplace. Negative option programs can provide substantial benefits for sellers and consumers. However … unfair and deceptive negative option practices have been a persistent source of consumer harm for decades, saddling shoppers with recurring payments for products and services they never intended to purchase nor wanted to continue buying. In the past, the Commission sought to address these practices through individual law enforcement actions and a patchwork of laws and regulations. Nevertheless, problems persist, as demonstrated by both a steady stream of state and federal law enforcement actions and thousands of consumer complaints each year.”

The final rule had several changes from the previous version, most notably dropping a requirement that sellers provide annual reminders to consumers of the negative option feature of their subscription, and dropping a prohibition on sellers telling consumers seeking to cancel their subscription about plan modifications or reasons to keep to their existing agreement without first asking if they want to hear about them.