On April 14, 2025 there will be no more of the never ending loop of frustration in trying to cancel your recurring subscriptions and memberships. The Federal Trade Commission ("FTC") has issued its finalized "Click to Cancel" rule, making it simpler for consumers to cancel recurring subscriptions.
This rule targets those frustrating hurdles that consumers face to unsubscribe from services like streaming platforms and subscription boxes. In the past companies often required phone calls, long forms, or multiple steps for cancellations, even though signing up was easy with just a few clicks. This new rule ensures that if a business offers an online option to subscribe, they must also offer an easy online option to cancel in a similar manner.
Businesses must now provide a clear, direct path for cancellation and requires companies to offer annual reminders of subscription renewals and to communicate any changes clearly to consumers. If a company proposes additional offers, alternatives, or incentives for consumers who are considering cancellation, the consumer must be able to decline those offers and proceed to cancel without additional hurdles. Check out the FTC's fact sheet here, which summarizes this new rule.
This rule is the result of the thousands of complaints the FTC has received about recurring subscription practices each year. This rule will now provide a consistent legal framework by prohibiting companies from:
- Misrepresenting any material fact made while marketing goods or services with a recurring subscription feature;
- Failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a recurring subscription feature;
- Failing to obtain a consumer’s express informed consent to the recurring subscription feature before charging the consumer; and
- Failing to provide a simple mechanism to cancel the recurring subscription feature and immediately halt charges.
Violating the FTC’s new rule comes with a $51,744 civil penalty, injunctive relief, rescission or reformation of contracts that violate the Click-to-Cancel Rule, refund of money or return of property, the payment of damages, and public notification of the violation. Plus, there is additional exposure for state specific unfair or deceptive act or practice laws, such as NY General Business Law 349 for attorneys' fees and statutory penalties of $1,000 per violation.
For more details, you can view the FTC's official release here.
