FTC finalizes "click-to-cancel" rule: Top points

On October 16, 2024, the Federal Trade Commission (FTC) finalized significant updates to the Negative Option Rule. The amendments to the rule, now titled the “Rule Concerning Recurring Subscriptions and Other Negative Option Programs,” impose disclosure, consent, and cancellation requirements (among other things) on automatically renewing subscriptions, continuity plans, and similar sales models.

Negative options

Federal regulations define a negative option as an offer or agreement to sell or provide any goods or services “under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(w).

In 2021, the FTC issued a Policy Statement incorporating that definition and making clear that the FTC intended to ensure that sellers of automatically renewing subscriptions, continuity plans, and similar offerings comply with Section 5 of the FTC Act, the Restore Online Shoppers’ Confidence Act, and other exiting sources of FTC authority. Now, with the issuance of the new rule, the FTC has gone a step further, setting forth a specific list of requirements that apply to almost all negative option programs in any media.

Key amendments to the rule

Among other changes, the new rule will require sellers of goods or services with a negative option feature to do the following:

• Be truthful and not misleading: The final rule prohibits sellers from misrepresenting any material fact when advertising goods or services with a negative option feature.


• Provide clear disclosures: Sellers must clearly and conspicuously disclose all material terms before obtaining a consumer’s billing information. Material terms include:


1. That consumers will be charged for the good or service, or that those charges will increase after any applicable trial period ends, and, if applicable, that the charges will be on a recurring basis, unless the consumer timely takes steps to prevent or stop such charges


2. Each deadline by which the consumer must act to prevent or stop the charge


3. The amount (or range of costs) the consumer will be charged and, if applicable, the frequency of the charges a consumer will incur unless the consumer takes timely steps to prevent or stop those charges, and


4. The information necessary for the consumer to find the easy cancellation mechanism discussed below.


• Obtain customer consent: Sellers must obtain a consumer’s express informed consent to the negative option feature before billing begins. This means the seller must:


1. Obtain the consumer’s unambiguously affirmative consent to the negative option feature offer separately from any other portion of the transaction


2. Not include any information that interferes with, detracts from, contradicts, or otherwise undermines the ability of consumers to provide their express informed consent to the negative option feature, and


3. Maintain verification of the consumer’s consent for at least three years (under most circumstances).


• Provide an easy cancellation mechanism: Sellers must provide a simple mechanism for consumers to cancel the negative option feature and immediately stop all recurring charges. The cancellation mechanism must be as easy to use as the mechanism used to consent to the negative option program, and it must be easy for the consumer to find. The rule also provides additional requirements depending on the method of cancellation (eg, online or by telephone).

Going forward

To comply with the new rule, businesses may need to invest in updating marketing practices, revising disclosures, and implementing or modifying systems to ensure easy cancellation mechanisms. A failure to comply with the rule could subject companies to substantial “civil penalties” of more than $50,000 per violation.

The majority of the new rule’s provisions will go into effect 180 days after the rule is published in the Federal Register, which should occur within about one week. Some of the amendments are set to go into effect 60 days after the final rule is published in the Federal Register.

If you have any questions, please reach out to any of the authors.