FTC finalizes ‘click to cancel’ rule

Companies required to make it easier for consumers to cancel subscriptions

The Federal Trade Commission announced it finalized a rule that mandates companies to make it as easy for consumers to cancel subscriptions as it is to sign up. 

The Rule Concerning Recurring Subscriptions and Other Negative Option Programs, better known as the “click to cancel” rule, will apply to almost all negative option programs in any media. Negative option programs, which assume that a consumer accepts the offer if they don’t actively reject it, typically fall into four categories: prenotification plans, continuity plans, automatic renewals and free trial conversion offers. 

The final rule requires consumer refunds for recurring subscriptions in certain circumstances, including where businesses are not truthful or leave out material information; where consumers are billed without agreeing to pay for products/services, and where sellers make it difficult to cancel. 

It also requires sellers to clearly and conspicuously disclose all material terms and conditions prior to enrolling consumers,  and to obtain proof of a consumer’s “unambiguously affirmative consent” to all negative option plans prior to charging the consumer. 

Under the new rule, businesses will have to provide a simple way for consumers to cancel enrollment in any negative option plan. This means it must be as easy for consumers to cancel as it is to sign up, and cancellation must be offered via the same medium through which consumers enroll. If a consumer signs up online, for example, the seller cannot force the consumer to speak with a representative to cancel. 

Most provisions of the FTC’s final rule are set to take effect 180 days after publication of the rule in the Federal Register. As of press time, the rule has not yet been published in the Federal Register. 

An industry group representing cable and internet providers has sued to block the rule, which could potentially delay implementation. The Internet & Television Association and groups representing the home security and online advertising industries filed a Petition to Review the regulation with the 5th U.S. Circuit Court of Appeals in New Orleans directly under the Rule 15 of the Federal Rules of Appellate Procedure, stating the rule oversteps the FTC’s authority. 

The final rule is part of the FTC’s review of the 1973 Negative Option Rule, which the agency is updating to combat unfair practices related to the increasing number of recurring-payment programs. 

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