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The Federal Trade Commission announced a final “click-to-cancel” rule will require sellers to make it as easy for consumers to cancel their enrollment as it was to sign up.

Most of the final rule’s provisions will go into effect 180 days after it is published in the Federal Register.

The Final Rule is thus extremely broad and applies to nearly all forms of negative options offered through all sales channels, including print, telephone, online and in person. Lest there be any doubt, the FTC has also made clear that the Final Rule is not limited to consumers but applies to business-to-business transactions as well.

FTC staff has developed a fact sheet summarizing the changes to the rule. The primary staffer on this matter is Katherine Johnson in the FTC’s Bureau of Consumer Protection.

Excerpts from FTC press release:

“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.”

The Commission’s updated rule will apply to almost all negative option programs in any media. The rule also will prohibit sellers from misrepresenting any material facts while using negative option marketing; require sellers to provide important information before obtaining consumers’ billing information and charging them; and require sellers to get consumers’ informed consent to the negative option features before charging them.

The final rule announced today is part of the FTC’s 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.

Commission approval and publication follows the March 2023 announcement of a notice of proposed rulemaking which resulted in more than 16,000 comments from consumers and federal and state government agencies, consumer groups, and trade associations.

The final rule will provide a consistent legal framework by prohibiting 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.

Following an evaluation of public comments, the Commission has voted to adopt a final rule with certain changes, most notably dropping a requirement that sellers provide annual reminders to consumers of the negative option feature of their subscription and dropping a prohibition on sellers telling consumers seeking to cancel their subscription about plan modifications or reasons to keep to their existing agreement without first asking if they want to hear about them.

The Commission vote approving publication of the final rule in the Federal Register was 3-2, with Commissioners Melissa Holyoak and Andrew N. Ferguson voting no. Commissioner Rebecca Kelly Slaughter issued a separate statement and Commissioner Holyoak issued a separate dissenting statement. Commissioner Ferguson’s dissenting statement is forthcoming. 

The Final Rule is currently slated to take effect 180 days after publication in the Federal Register for the disclosure, consent and cancellation requirements and 60 days following publication for the provisions prohibiting misrepresentations.