FTC sets final ‘Click-to-Cancel’ rule to facilitate subscription cancellations

The Federal Trade Commission (FTC) has issued a “Click-to-cancel” rule aimed at making subscription cancellations as easy as signing up for them.

The updated rule mandates a simpler mechanism for companies to cancel subscriptions and stop charges. It also prohibits sellers from misrepresenting any material fact when marketing goods or services with a negative option feature.

The rule aims to promote clarity in the disclosure of material terms before the consumer proceeds to subscription and payment of the related charges, by requiring companies to obtain the consumer’s explicit consent before subscription.

The Commission stated that most of the regulation’s provisions will come into effect 180 days after the updated rule is published in the Federal Register.

“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 updated rule will apply to almost all negative option programmes in any media, the Commission said in a statement.

The final rule announced on Thursday is part of the FTC’s ongoing review of the 1973 Negative Option Rule.

The FTC is seeking to modernise the regulation as it aims to combat unfair or deceptive marketing and sales practices related to subscriptions, memberships, and other recurring payment programmes in an increasingly digital marketing landscape.

The approval of the rule follows the March 2023 announcement of a proposed rulemaking that received responses from more than 16,000 consumers, federal government agencies, consumer groups, and trade associations.

In June 2023, the FTC accused giant retailer Amazon of misleading its customers into renewing their Amazon Prime subscriptions, using a ‘manipulative’ website design that complicated the cancellation process.

Amazon rejected the charges and called them “false on the facts and the law.”