The FTC's Click to Cancel Rule
Be prepared to update your processes and your websites to make cancelling easy again!
My law firm partner, Brian Heller and I, recently drafted the attached blog that summarizes the key requirements for companies to implement the FTC’s new Click to Cancel Rule, effective in May 2025.
What does the new rule require? Well, I am glad you asked…
First it applies to all companies offering subscriptions that continue unless a consumer takes some affirmative action to cancel (also know as the “negative option”).
It then requires, in short, that:
there be full disclosure about the details of the subscription, including renewal time frame(s), pricing, and specific details about how to cancel prior to signing up;
that the consumer must consent to those details separate and apart from other consents to the transaction or other general terms of service (and appear along side such other required terms or transaction details) - so, think new check box or pop-up in addition to current online approval action;
cancelation be offered in the same manner (effectively at parity) as sign up (so, if electronic sign up, then electronic cancellation, if two steps to sign up, then effectively two steps to cancel, etc. - no more making consumers talk to a person, interact with a virtual chat bot, or go through multiple pages/steps before cancelling)!
cancellation be simple, conspicuous and without any material impediments - so, likely eliminates (or severely mitigates) “win back” efforts if they are part of the cancellation process, cannot require steps that require consumer’s to incur costs, and cannot require consumers to have to search for how to cancel - it must be very easy to find; and
there can be no delay in processing cancellation - so must essentially be immediate and result in no future charges to the consumer.
The process applies to online sign-ups and cancellations as well as use of email and in person interactions, so important you review all of your potential channels for initiating and terminating subscriptions and update accordingly.
Take a look at the attached for more detail and of course feel free to reach out with any questions!
Thx for sharing. Always fun to co-write with you!