On October 16, 2024, the Federal Trade Commission announced its final “click-to-cancel” rule, expanding its prior rules on negative options to include all types of subscription sales.
A central element of the rule is a requirement that sellers make it as easy for consumers to cancel their enrollment as it was to sign up, meaning offering the so-called “click-to-cancel” mechanism. The rule also:
- prohibits sellers from misrepresenting any material facts while using negative option marketing;
- requires clear and conspicuous disclosures of material terms before obtaining consumers’ billing information and charging them; and
- requires sellers to obtain informed consent to the negative option features before charging consumers.
The final rule covers B2B as well as B2C transactions, but recognizes that negative option provisions can be negotiated between businesses. Most requirements of the rule will go into effect 180 days after it is published in the Federal Register.
The proposed rule, announced in March 2023, garnered thousands of comments. The Commission decided against including two provisions it initially proposed. First is a requirement that businesses send consumers annual reminders about the negative option feature. Second is a requirement that sellers obtain unambiguous consent to send consumers “saves,” defined in the proposed rule as “an attempt by a seller to present any additional offers, modifications to the existing agreement, reasons to retain the existing offer, or similar information when a consumer attempts to cancel a negative option feature.” The latter provision in particular appears to potentially pose First Amendment issues. The Commission is not entirely abandoning these provisions, however. It plans to issue a Supplemental Notice of Proposed Rulemaking (SNPR) and will keep the record open on these points.
The vote was 3-2, with Commissioner Slaughter issuing a concurring opinion and Republican Commissioners Ferguson and Holyoak dissenting. Commissioner Holyoak issued a detailed dissenting opinion outlining her views of the procedural and substantive irregularities and deficiencies of the rule. It remains to be seen whether the rule will be challenged.