FTC’s New Click-to-Cancel Rule: What It Means for Consumers and Businesses

The US Federal Trade Commission (FTC) has taken a bold step to protect consumers from subscription traps and complex cancellation processes. The Click-to-Cancel rule is regulation aimed at ensuring businesses make it just as easy for consumers to cancel a subscription as it was to sign up. This rule is part of a broader effort to crack down on deceptive practices that lead to consumer frustration and financial loss.​ The rule took effect on January 14, 2025. Businesses will have until May 14, 2025, to comply with the rule's comprehensive requirements.

What Is the Click-to-Cancel Rule?

The Click-to-Cancel rule mandates that companies offering subscriptions or recurring charges must provide a simple, online cancellation process. If a customer signs up for a service online, they must be able to cancel it through an equally straightforward online method—without unnecessary hurdles like phone calls, lengthy forms, or misleading retention tactics.

Key Provisions of the Rule

1. Easy Cancellation: If you can subscribe with one click, you should be able to cancel with one click (or at least an equally simple process).
2. No Hidden Steps: Businesses cannot require customers to navigate through excessive pages, prompts, or retention offers before cancellation.
3. Annual Renewal Reminders: For services with annual billing, businesses must send consumers a reminder before the next charge.
4. Clear Disclosures and Consent: Companies must disclose material terms in a clear, upfront manner before the customer subscribes.

Impact on Consumers

For consumers, this rule is a major win. Many people have experienced the frustration of attempting to cancel a subscription, only to be met with obstacles like automated phone menus, pushy sales tactics, or endless redirect loops. The Click-to-Cancel rule helps eliminate these predatory tactics, ensuring consumers can exit a subscription as easily as they entered it.

Impact on Businesses

While businesses that rely on subscription revenue may see initial challenges in compliance, the new rule can also build greater consumer trust and loyalty. Companies that provide an honest and transparent cancellation process are likely to foster better relationships with their customers, leading to higher retention in the long run.

Enforcement and Penalties

The FTC has signaled that it will aggressively enforce this rule, with penalties for non-compliance potentially reaching thousands of dollars per violation. Companies that fail to follow the Click-to-Cancel rule risk legal action, consumer complaints, and reputational damage.

Looking Ahead

The Click-to-Cancel rule reflects a growing shift towards consumer-friendly policies in the digital economy. As regulators continue to prioritize fairness and transparency, businesses should proactively adjust their subscription models to ensure compliance and customer satisfaction.