The FTC’s New “Click to Cancel” Rule: What Performance Marketers Need to Know

With the FTC’s new “Click to Cancel” rule that was announced on October 16th as part of its amended Negative Option Rule, digital and affiliate marketers relying on subscription models need to prepare for changes. This rule, which takes effect April 14th, 2025, empowers the FTC to crack down on misleading billing practices and aims to make it easier for consumers to end subscriptions. 

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” said Commission Chair Lina M. Khan. 

This rule addresses those “hoops” and aims to provide clearer guidelines on fair subscription practices, ensuring transparency, consumer control, and brand accountability.

Why This Rule Matters To You

Subscription models are foundational to many digital and affiliate marketing strategies, but they must be designed and managed to meet FTC standards. The Commission’s new rule is designed to combat rising consumer complaints. Over the past five years, complaints to the FTC about challenging cancellations and misleading billing practices have been steadily increasing. In 2024, the FTC received an average of nearly 70 complaints per day, compared to 42 per day in 2021. This surge highlights growing consumer frustration with difficult cancellation processes and deceptive billing practices.

What Are “Negative Option” Practices?

“Negative option” practices are marketing tactics where a consumer’s inaction, such as not canceling a trial or subscription, results in a charge. While these practices can be convenient when consumers are fully informed, they’re also prone to abuse when companies bury important information or make cancellation processes confusing or difficult. Common examples include:

• Trial-to-Pay Conversions: Trials that automatically convert to a paid subscription without clear notice or easy cancellation methods.
• Recurring Billing with Hidden Terms: Automatic renewals that aren’t clearly disclosed or make it difficult for users to end the subscription.
• Burdensome Cancellation Requirements: Multi-step or deliberately complex cancellation procedures designed to discourage or prevent users from canceling, which leads to frustration and unintentional charges.

The “Click to Cancel” rule specifically targets these types of negative options, ensuring that cancellation is as easy as signing up.

Key Requirements for Marketers Under the New Rule

To comply with the FTC’s standards, marketers need to ensure their subscription services are transparent, easy to cancel, and fully compliant with consumer protection laws:

1. Truthful and Transparent Information
   • Important terms, including subscription fees, renewal rates, and any recurring costs, must be clear and truthful. Any critical information should be easy for consumers to find, helping them make informed decisions.
2. Informed Consent Before Charging
   • Consumers need to know exactly what they’re agreeing to, and marketers must be able to show evidence that consumers knowingly opted into a subscription or recurring payment plan. No hidden fees, no surprises.
3. Accessible Cancellation Options
   • If consumers signed up online, they should be able to cancel online with a “Click to Cancel” feature that’s just as accessible and straightforward as the sign-up process. For subscriptions signed up for in person, a cancellation method by phone or online must be available.
   • Avoid lengthy cancellation steps. The process should be clear, fast, and user-friendly.
4. Liability and Penalties for Non-Compliance
   • The FTC has emphasized that businesses failing to comply with the new rule may face civil penalties and be required to offer refunds to consumers misled by negative option practices.

How This Rule Affects Your Marketing Strategy

Marketers must revisit subscription practices to ensure compliance with the “Click to Cancel” rule. This might include:

• Reviewing Current Funnels and Touchpoints: Ensure all consumer-facing materials, from the sign-up page to renewal notifications, clearly communicate the subscription’s terms and fees.
• Implementing Clear Consent Processes: Consent language should be easy to understand and unambiguous, with users fully aware of what they’re agreeing to before committing.
• Streamlining the Cancellation Process: Create a straightforward cancellation process that’s equivalent in ease to the sign-up, ensuring consumer goodwill and reducing complaints.

The FTC’s “Click to Cancel” rule marks a significant shift toward more consumer-friendly subscription practices, reinforcing transparency and accessibility in the digital marketing space. As digital and affiliate marketers, compliance is not only crucial for avoiding penalties but also for fostering consumer trust and brand loyalty. By aligning with these new guidelines, you ensure that your brand is both compliant and in tune with consumer expectations for fair and honest business practices.

For more information and guidance on adhering to all FTC rules and regulations in your marketing, contact brands@influencelogic.com