Home FTC announces new ‘click-to-cancel’ rule to make subscriptions easier to cancel

FTC announces new ‘click-to-cancel’ rule to make subscriptions easier to cancel

TLDR

  • The FTC's new "click to cancel" rule will require companies to make canceling subscriptions as easy as signing up, effective in 180 days.
  • The rule targets deceptive practices in subscription services, ensuring customers can easily cancel and are clearly informed of what they are agreeing to.
  • Businesses must stop charges immediately upon cancellation, but annual renewal reminders and unsolicited plan modifications were not included in the final rule.

The U.S. Federal Trade Commission (FTC) has announced a “click to cancel” rule to make it easier for consumers to end subscriptions.

The “click to cancel” rule will force subscription sellers and companies to make it as easy to cancel a subscription as it was to sign up in the first place.

Provided there are no legal challenges to the rule, it will go into effect in the U.S. in 180 days.

“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.”

Last year the FTC investigated Adobe over its challenging cancellation process, and Amazon for using deceptive tactics to get users to sign up to Amazon Prime.

What does the “click to cancel” rule mean?

There are four main points to the new “click to cancel rule”. To understand them, it’s important to know what a ‘negative option feature’ is – a contract provision that allows a seller to interpret a customer’s inaction as acceptance of an offer. For example, automatic renewals where a service continues until a customer actively cancels, or free-to-pay plans where a free trial becomes a paid one unless a customer cancels.

  • Important information must be truthful, clear, and easy for customers to find
  • People must know what they are agreeing to before signing up – and sellers must be able to show that people knew what they agreed to before signing up
  • There must be a way to cancel that is as easy as it was to sign up, e.g. online cancelations must be easy to access and not require customers to go through chatbots or agents; anything agreed to in-person must provide an online and phone cancellation option
  • Charges must immediately be stopped on cancellation

The FTC decided to scrap additional elements of the rule that would have required companies to provide annual subscription renewal reminders. It also did not include a rule that banned sellers from giving plan modification info to customers trying to cancel without first asking the customer if they wanted to hear about them.

Featured image credit: Ideogram

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Ali Rees
Tech journalist

Ali Rees is a freelance writer based in the UK. They have worked as a data and analytics consultant, a software tester, and a digital marketing and SEO specialist. They have been a keen gamer and tech enthusiast since their childhood in are currently the Gaming and Tech editor at Brig Newspaper. They also have a Substack where they review short video games. During the pandemic, Ali turned their hand to live streaming and is a fan of Twitch. When not writing, Ali enjoys playing video and board games, live music, and reading. They have two cats and both of…

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.