New ‘Click to Cancel’ Rule Makes Canceling Subscriptions Simpler

Most of us have been there: You signed up for a new subscription, whether it be a 30-day free trial of the latest streaming service or a new gym membership. The sign-up process was easy, and they pulled you in by saying you could cancel at any time. However, when you go to take them up on that cancelation, they make you jump through hoops. Some make you navigate through a confusing maze of system settings to cancel, or they make you call customer service (if it happens to be during their office hours, just hope you can manage to get past the virtual call center to a real human). Worse yet, some gyms make you go into a physical location to finalize a cancelation.

All of these tricky roadblocks to canceling subscriptions can lead consumers to pay for months and months for service they would have canceled ages ago had they been able to cancel more easily. That’s why the Federal Trade Commission (FTC) is stepping in with a new “Click to Cancel” rule, making it easier than ever for consumers to terminate recurring subscriptions and memberships.

What Is the FTC’s “Click to Cancel” Rule?

The FTC’s new “Click to Cancel” rule, announced on Oct. 16, requires recurring subscription services to make canceling their services as easy as it was to sign up.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said FTC 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 rule introduces new guardrails for predatory practices when marketing subscription services by:

• Prohibiting misrepresentations of the terms of the offer that matter most to customers
• Requiring all material terms of the deal to be disclosed before signup
• Requiring services to obtain proof of consent before charging people
• Requiring services to allow consumers to cancel through the same medium they signed up, whether it was online or by phone. For example: you can no longer require people to talk to a live or virtual representative to cancel if they didn’t have to do that to sign up.

When Does “Click to Cancel” Take Effect?

The new “Click to Cancel” rule will take full effect 180 days after it hits the federal register. That’s roughly 6 months from now, or mid-April 2025.

What Happens If a Company Breaks the “Click to Cancel” Rule?

Violators of the new FTC rule may be liable for civil penalties. These penalties are fines that deter rulebreakers because they often exceed what a company earns through breaking the rules (they can reach up to $50,120 per violation).

Sources

• FTC.gov: “Click to Cancel: The FTC’s amended Negative Option Rule and what it means for your business” (2024)
• FTC.gov: “Notices of Penalty Offenses”