WASHINGTON, D.C. – On Wednesday, the Federal Trade Commission (FTC) announced its final “click to cancel” rule, requiring sellers who offer recurring subscriptions to “make it as easy for consumers to cancel their enrollment as it was to sign up.”
In announcing the new rule, the FTC said the updated standard “will apply to almost all negative option programs in any media.” This most certainly includes adult websites offering subscription access to consumers.
In addition to requiring sellers to offer a means of cancelling that mirrors the method of the original purchase, the new rule prohibits sellers from:
- Misrepresenting any material fact made while marketing goods or services with a negative option feature
- Failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature;
- Failing to obtain a consumer’s express informed consent to the negative option feature before charging the consumer; and
- Failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.
“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.”
In a “fact sheet” accompanying the announcement, the FTC explained that under the new negative option rule, “important information must be truthful, clear and easy to find; people have to know what they’re agreeing to before they sign up; sellers have to be able to show that people knew what they agreed to before they signed up” and “there always has to be a way to cancel that’s as quick and easy as it was to sign up” – meaning that if a consumer signed up online, the business must offer a click to cancel method, and if they signed up in person, the customer must be offered a means to cancel by phone.
The FTC said the new rule is part of its “ongoing review of its 1973 Negative Option Rule, which the agency 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.”
“While negative option marketing programs can be convenient for sellers and consumers, the FTC receives thousands of complaints about negative option and recurring subscription practices each year,” FTC added in the announcement. “The number of complaints has been steadily increasing over the past five years and in 2024 the Commission received nearly 70 consumer complaints per day on average, up from 42 per day in 2021.”
The FTC’s adoption of the new rule wasn’t unanimous, though. The measure passed on a 3-2 vote, with the Commission’s two Republican members, Melissa Holyoak and Andrew N. Ferguson, voting no.
“Whenever we engage in rulemaking, the Commission should recall that Article I of the Constitution vests legislative powers in Congress, not with agencies,” Holyoak said in her dissenting statement. “Because of that, it is elected officials that delineate the boundaries, and set the requirements, that we as Commissioners must adhere to. I believe the Commission exceeds those boundaries and requirements in amendments to the Negative Option Rule it finalizes today. Instead of pursuing targeted enforcement efforts or finalizing a rule consistent with the Commission’s authority under Section 18 of the FTC Act, the Commission has used its limited resources to promulgate a broader regulation that may not survive legal challenge.”
In a statement criticizing the new rule, U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley said the “FTC’s expansive subscription rule is the latest power grab by the Commission in its pursuit to micromanage business decisions.”
“Not only will this rule deter businesses from providing sensible, consumer-friendly subscriptions, but it will leave Americans with fewer options, higher prices, and more headaches,” Bradley added. “Even the agency’s own Commissioners are expressing similar concerns with this rule, revealing just how controversial and ill-advised this decision was. We are actively examining the rule and considering all options to ensure consumers can continue to access the convenience and affordability of the subscription services they desire.”
