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The Federal Trade Commission (FTC) on Wednesday announced that it finalized its « click to cancel » rule that will require companies to make it easier for consumers to cancel their subscriptions.
The click to cancel rule will apply to nearly all sellers of negative option programs – which is a form of contract that assumes the consumer accepts the offer if they don’t take active steps to reject it, such as with a subscription that automatically renews unless canceled.
The rule requires that sellers get consumers’ consent for subscriptions, auto-renewals and free trials that convert to paid memberships. They must also offer a cancellation process that is « at least as easy to use » as the sign-up process is.
It will prohibit sellers from misrepresenting any material fact while marketing goods or services with a negative option feature; failing to disclose material terms prior to obtaining a customer’s billing information; failing to obtain a consumer’s express informed consent to the negative option feature before charging them; and not providing a simple mechanism to cancel the subscription or membership and immediately halt charges.
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The FTC initially proposed the click to cancel rule in March 2023. (Photographer: Stefani Reynolds/Bloomberg via Getty Images / Getty Images)
The rule also prohibits sellers from requiring consumers who signed up through an app or website to go through a chatbot or agent to cancel, while companies must also provide consumers who signed up in-person with means to cancel by phone or online.
« Too often, businesses make people jump through endless hoops just to cancel a subscription, » FTC Chair Lina Khan said in a statement. « 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. »
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FTC Chair Lina Khan said the click to cancel rule will be helpful for consumers. (Photo by Eugene Gologursky/Getty Images for Fast Company / Getty Images)
Most of the final rule’s provisions will take effect 180 days after the rule is published in the Federal Register.
The rule was first proposed in March 2023 and several provisions in the initial rule were dropped after the FTC’s review that followed the public comment period. More than 16,000 comments were received from consumers, federal and state government agencies, consumer groups and trade associations during the comment period.
The final rule dropped a provision that would’ve required sellers to provide annual reminders to consumers about the negative option feature of their subscription.
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It also removed a prohibition on sellers telling consumers seeking to cancel their subscription about modifications they can make to their plan or reasons to keep their existing agreement without first asking if they want to hear about them.
Reuters contributed to this report.
