FTC Publishes Final Rule on Subscription and Membership Programs

The Federal Trade Commission (FTC) announced a final rule that will require sellers to make it as easy for consumers to cancel their subscriptions, memberships and other recurring payment programs as it was to sign up.

The “click-to-cancel” rule was approved and published after the FTC’s March 2023 announcement of a notice of proposed rulemaking, and it will go into effect 180 days after it is published in the Federal Register, the regulator said in a Wednesday (Oct. 16) press release.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” Commission Chair Lina M. Khan said in the release. “The FTC’s rule will end these tricks and traps, saving Americans time and money.”

The rule will apply to almost all negative option programs — those that renew automatically unless the consumer cancels — in any media, according to the release.

It will prohibit 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 before charging the consumer; and failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges, the release said.

The number of consumer complaints the FTC receives about negative option and recurring subscription practices has steadily increased over the last five years, rising from an average of 42 per day in 2021 to nearly 70 per day in 2024, per the release.

When the FTC announced its notice of proposed rulemaking on this issue in March 2023, it received more than 16,000 comments from consumers, federal and state government agencies, consumer groups and trade associations, according to the release.

In recent years, the FTC has also sued retailers for practices involving their membership programs, including an automatic enrollment that required consumers to opt out to avoid monthly charges and did not disclose all the terms and conditions; a free trial that was followed by automatic charges, obstacles to canceling the subscription and failure to acknowledge cancelations; and an online purchase that automatically enrolled the buyer in two subscription programs and provided no online option to cancel the subscriptions when they were discovered.