The Federal Trade Commission’s newly finalized Click-to-Cancel rule, part of its amendment to the Negative Option Rule, significantly raises the bar for businesses offering subscriptions, memberships, and other recurring billing arrangements. The goal: eliminate the common barriers consumers face when trying to cancel ongoing charges. The rule goes into effect on May 14, 2025, and brings with it several compliance requirements that demand immediate attention.
What the Rule Requires
The Click-to-Cancel rule applies to any business using a “negative option” feature—that is, any offer that interprets a consumer’s silence or inaction as consent to be charged. Key requirements include:
- Equal Ease of Cancellation: Businesses must allow consumers to cancel subscriptions using the same method they used to sign up. If a consumer enrolls online, they must be able to cancel online—without needing to call or speak with an agent.
- No Retention Roadblocks: Businesses may not use lengthy scripts, mandatory surveys, or multiple screens designed to delay or dissuade cancellation. Retention offers must be expressly agreed to by the consumer before being presented.
- Clear and Conspicuous Disclosures: Before charging a customer, businesses must clearly disclose:
- The fact that the charge is recurring;
- The frequency and amount of charges;
- The deadline to cancel to avoid being charged;
- The specific cancellation mechanism.
- Affirmative Informed Consent: Companies must obtain explicit, informed consent to all material terms—including the recurring nature of the agreement—before charging the consumer. Consent must be separate and unambiguous, not hidden in general terms and conditions.
- Recordkeeping and Compliance: Businesses must maintain proof of consent and cancellation mechanisms, along with compliance procedures, for at least three years.
What This Means for Your Business
The FTC has made clear that enforcement will be active and aggressive. Civil penalties for non-compliance can exceed $50,000 per violation, and failure to comply could also expose companies to state-level enforcement or private class actions.
This rule affects not only traditional subscription services but also streaming platforms, software-as-a-service (SaaS) businesses, membership organizations, mobile apps, and any business using continuity billing models. If your cancellation process requires more than a few clicks—or if your sign-up process is clearer than your termination flow—you may already be at risk.
How Pastore LLC Can Help
Pastore LLC works with clients in regulated industries, tech, fitness and consumer services to help implement compliant billing and subscription structures. Our attorneys assist with:
- Auditing current enrollment and cancellation flows;
- Drafting compliant disclosures and consent language;
- Advising on recordkeeping practices and enforcement exposure;
- Defending businesses facing FTC scrutiny or consumer claims.
As enforcement approaches, a proactive review of your subscription workflows is not only prudent—it is essential. We can help your legal, marketing, and tech teams align on a compliance strategy that minimizes disruption while satisfying the FTC’s new requirements.
Contact us to schedule a compliance review or learn more about implementing a cancellation process that meets federal standards.