As we previously reported, on October 16, 2024, the Federal Trade Commission (FTC), after receiving thousands of public comments, released the final version of its Negative Option Rule. The Rule is now scheduled to go into effect on July 14, 2025.[1] Any company with automatic renewal subscriptions or memberships will be impacted by the Rule.

The Rule, also known as the “Click-to-Cancel” Rule, will regulate the disclosure, consent, and cancellation requirements for companies utilizing negative options. A “negative option” is an arrangement where goods or services are provided based on a consumer’s silence—a failure to take some affirmative action to reject or cancel. A subscription service with automatic renewal features is a common negative option program.

To the surprise of many, on May 9, 2025, the Trump era FTC advised businesses that it will indeed be enforcing the Rule.[2] The “conventional wisdom” among many FTC aficionados was that the FTC would perhaps jettison the revised rule.

Here are the top four issues businesses have to be aware of:

1. Prohibition on Material Misrepresentations:

The Rule prohibits misrepresentations of any material fact when marketing negative option features, regardless of whether it relates to the negative option.[3]

A fact is “material” when it is likely to affect a person’s choice or conduct regarding a product or service.[4] For example, a material misrepresentation would exist if a business advertised a “risk free trial” and the consumer paid for the shipping and handling fee, but the consumer was nevertheless placed into a negative option program.[5]

The Rule specifies that other material facts include deadlines to prevent or stop a charge, deadlines to cancel a negative option, costs, the purpose or efficacy of the underlying goods or services, and the health and safety of the goods or services.[6]

2. Disclosures:

The Rule requires “clear and conspicuous” disclosure of all material terms and specifies, at a minimum, the following terms must be disclosed:

  • whether consumers will be charged, whether charges could increase after a trial period, and whether charges are recurring;
  • the deadline by which consumers must cancel to avoid future charges, this could be a specific date or frequency (e.g., 7 days before the first of the month);
  • the amount or range of costs;
  • the frequency of the charges; and
  • information for the consumer to find a cancellation mechanism

Clear and conspicuous disclosure is defined by the FTC as easily noticeable, difficult to miss, and easily understandable to ordinary consumers.[7]

Specific guidelines provided by the FTC include:

  • Solely visual or audible communication: The disclosure must be presented through the same means as the communication. Visual disclosures must stand out from accompanying text and audible disclosures (e.g., on a telephone call) must be delivered in a volume, speed, and cadence that can be easily understood.
  • Both visual and audible communication (e.g., a television ad): Disclosures should be presented in both the visual and audible parts of the communication— even if the negative option is only visually or audibly presented.
  • Online communications: For communications on the Internet, mobile applications, or software, disclosure must be unavoidable.[8]

3. Affirmative Consent: The Rule requires “express informed consent” before a consumer is charged through a negative option feature.[9] The Rule requires that this consent be separate from any other portion of a transaction and that no information can detract from a consumer’s ability to unambiguously consent.[10]

Sellers must keep and maintain the verification of a consumer’s consent for at least three years, unless the business can prove no user could complete the transaction without consent.[11] For telemarketing transactions, there are additional requirements, including, obtaining the last four digits of an account number and maintaining an audio recording of the transaction.[12]

The Rule provides a safe harbor for written communications, including offers on the Internet or on mobile applications where a seller obtains consent through a separate check box or signature before a consumer can sign up for the negative option.[13]

4. Simple Cancellation Requirements: Businesses must include a simple mechanism for a consumer to cancel the negative option and immediately stop any recurring charges.[14] The option to cancel must be as easy as the option used by the business to ensure affirmative consent to the negative option.[15]

  • Online Transactions: Cancellation must be easy to find and cannot require consumer interaction with a  sales representative if such interaction was not needed to obtain consent.[16]
  • Telephone Transactions: The seller must provide a phone number that operates during normal business ours and is not more expensive than the phone number used to sign up.[17]
  • In-Person Transactions: The seller may provide an in-person method to sign up but must provide an online or phone method to cancel. [18]

For a more detailed analysis of the Rule, please refer to our advisory on October 25, 2024.

Wiggin and Dana possess extensive knowledge and experience in navigating both federal and state consumer protection laws and regulations, including the many Guides and Trade Regulation Rules adopted by the Federal Trade Commission.

[1] Federal Trade Commission, Statement of the Commission Regarding the Negative Option Rule Matter Number P064202, (May 9, 2025).

[2]  Id.

[3] 16 C.F.R. § 425.3

[4] 16 C.F.R. § 425.2(e)

[5] Federal Trade Commission, Proposed text of Federal Register Publication, 33 (October 16, 2024) (Citing FTC v. Triangle Media Corp., No. 3:18-cv-01388, 2018 U.S. Dist. LEXIS 110465 (S.D. Cal., June 29, 2018))

[6]16 C.F.R. § 425.3

[7] 16 C.F.R. § 425.2(c)

[8] Id.

[9] 16 C.F.R. § 425.5

[10] Id.

[11] 16 C.F.R. § 425.5(a)(3)

[12] 16 C.F.R. § 425.5(b)

[13] 16 C.F.R. § 425.5(c)

[14] 16 C.F.R. § 425.6

[15] Id.

[16] 16 C.F.R. § 425.6(c)(1)

[17] 16 C.F.R. § 425.6(c)(2)

[18] 16 C.F.R. § 425.6(c)(3)