The Federal Trade Commission has set its final “click-to-cancel” rule, which will require sellers to make it as easy for consumers to cancel their subscriptions — including streaming services and pay TV — as it was to sign up.
The rule, approved in a 3-2 vote, will apply to almost all “negative option” programs in any media. That’s where consumers are automatically charged for goods and services unless they actively decline them.
These generally fall into four categories: automatic renewals, free trial conversion offers, pre-notification plans and continuity plans.
“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC chair Lina Khan said in a statement. “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.”
Here’s everything you need to know:
What will Click-to-Cancel do?
Click-to-cancel will prohibit sellers from misrepresenting “material facts” while using negative option marketing — or any part of an offer that would matter to the customer or influence their decision on whether to sign up.
It also requires sellers to provide more information before obtaining consumers’ billing details and charging them. They also have to get consumers’ informed consent to these features before charging them.
Businesses will be prohibited from making customers talk to a live or virtual representative to cancel if they didn’t have to do that to sign up. They’ll also be required to offer customers the ability to cancel their service in-person, online or over the phone.
The commission, which announced the proposed rule back in March, received input from more than 16,000 comments from consumers. They also took feedback from federal and state government agencies, consumer groups and trade associations on the click-to-cancel proposal.
Once public comments were evaluated, the FTC dropped a requirement that sellers would need to provide annual reminders to consumers about the negative option feature in their subscription. It also dropped a prohibition on sellers telling consumers who look 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.
Why is the FTC announcing this new rule?
The update is part of an ongoing FTC review designed to modernize its 1973 Negative Option rule. The agency is looking to ramp up its efforts 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.”
It also comes as the commission receives thousands of complaints about negative option and recurring subscription practices each year. In 2024 alone, the FTC received nearly 70 consumer complaints per day on average, up from 42 per day in 2021.
When will it take effect?
Most of the final rule’s provisions will go into effect 180 days after it is published in the Federal Register, with some in effect within 60 days of publication.
Streamers weigh in
In a joint filing, the Motion Picture Association — which represents the major streamers — and the Entertainment Software Association opposed the rule. They arguing that its requirements will “likely hamper industry, while doing little to protect consumers from the minority of bad actors that engage in the most egregious forms of deceptive negative option marketing” and that its changes are “unworkable in many respects.”
A Netflix spokesperson said that its members can “cancel as easily as they can sign up and can cancel online at any time.” The service does not require subscribers to chat with a live agent to cancel their subscription.
Representatives for Paramount+ declined to comment. Disney+, Max, Peacock, Prime Video and Apple TV+ did not immediately return TheWrap’s request for comment.
Leave a Reply