FTC Click-to-Cancel Rule: What Subscription Businesses Must Do in 2026

What Is the FTC Click-to-Cancel Rule?

In October 2024, the FTC finalised amendments to its “Negative Option Rule” (16 CFR Part 425), commonly called the “Click-to-Cancel” rule. The core principle is simple: cancelling a subscription must be at least as easy as signing up for one.

If a customer can sign up online in two clicks, they must be able to cancel online in a comparable number of steps. No phone calls required. No retention agents. No hidden cancellation pages.

The rule took effect on 14 January 2025 for most provisions, with full compliance required by 14 May 2025. As of 2026, the rule is fully enforced.

Who Does the Rule Apply To?

The rule applies to virtually every business that offers a “negative option” feature, which includes:

• Automatic renewals — SaaS subscriptions, streaming services, magazine subscriptions
• Continuity plans — Subscription boxes, recurring deliveries
• Free-to-paid conversions — Free trials that convert to paid subscriptions
• Pre-notification plans — “We'll charge you unless you cancel” models

If you charge someone on a recurring basis — whether weekly, monthly, or annually — this rule applies to you.

The Four Key Requirements

1. Pre-Purchase Disclosures

Before a customer agrees to a subscription, you must clearly and conspicuously disclose:

• That they will be charged on a recurring basis
• The amount they will be charged (or how the amount is calculated)
• The frequency of charges (monthly, annually, etc.)
• The deadline or steps needed to avoid being charged
• How to cancel

These disclosures must appear before the customer provides their payment information — not buried in terms of service that nobody reads.

2. Informed Consent

You must obtain the customer's “unambiguously affirmative consent” specifically to the negative option feature. This means:

• A separate checkbox or acknowledgement specifically for the recurring charge (not bundled with other consents)
• The consent must be distinct from the general terms of service acceptance
• Pre-checked boxes do not count
• The consent language must clearly state the recurring nature and price

3. Simple Cancellation Mechanism

This is the headline requirement. Your cancellation process must be:

• Available through the same channel as sign-up. If a customer signed up online, they must be able to cancel online. You cannot force them to call a phone number.
• Easy to find. The cancellation mechanism must be immediately accessible — no hunting through settings pages or buried support articles.
• Quick to complete. The cancellation should take a comparable number of steps as sign-up. No long surveys, retention offers that must be declined multiple times, or artificially extended processes.
• Immediately effective. When a customer clicks cancel, the cancellation must process. You can confirm the request, but you cannot delay processing.

4. No Retention Obstacles

The rule specifically prohibits “save” tactics that obstruct cancellation:

• You cannot require a phone call to cancel if sign-up was online
• You cannot require customers to speak with a retention agent before cancellation is processed
• You can offer a single save offer (discount, pause, etc.), but the customer must be able to decline it and proceed to cancel in one click
• You cannot present multiple save offers in sequence

What About Free Trials?

Free trials that convert to paid subscriptions get extra scrutiny under the rule:

• You must clearly disclose the trial terms, including when it ends and what the post-trial price will be
• You must get affirmative consent specifically acknowledging the conversion to paid
• The cancellation mechanism must be available during the trial period
• Consider sending a reminder before the trial converts — while not strictly required by the FTC rule, several states (California, Oregon) have separate laws requiring this

State Laws That Add More Requirements

The FTC rule sets a federal floor, but several states go further:

• California (ARL): Requires a pre-conversion reminder at least 3–21 days before a free trial converts to paid. Also requires annual reminders for auto-renewing subscriptions.
• Oregon: Similar free trial notification requirements. Must notify before conversion and annually for ongoing subscriptions.
• Colorado: Auto-renewal transparency act requires clear disclosures and easy cancellation.
• New York: Requires clear auto-renewal disclosures and acknowledgement before charging.
• Illinois: Auto-renewal protections with specific disclosure requirements.

Penalties for Non-Compliance

The FTC can impose civil penalties of up to $51,744 per violation (adjusted annually for inflation). Each customer transaction can constitute a separate violation. For a subscription business with thousands of customers, penalties can be catastrophic.

Recent enforcement examples:

• The FTC has brought actions against major companies including Amazon (Prime cancellation process) and ABCMouse (children's subscription cancellation)
• State attorneys general have independently pursued companies under their own auto-renewal laws
• Class action lawsuits from consumers are also a growing risk

How to Comply: Practical Steps

For SaaS and Digital Subscriptions

1. Add a visible “Cancel Subscription” button in your account settings page. Do not hide it behind support tickets or contact forms.
2. Make it work in 2–3 clicks: Account settings → Subscription → Cancel → Confirm. Done.
3. You may show one save offer (e.g., “Would you like 50% off next month instead?”) but include a clear “No, cancel my subscription” option alongside it.
4. Send a confirmation email after cancellation with the effective date and any remaining access period.

For Free Trial Conversions

1. Show the post-trial price prominently on the sign-up page, near the payment field.
2. Use a separate consent checkbox for the recurring charge: “I understand that after my [X]-day free trial, I will be charged [amount] per [period] until I cancel.”
3. Send a reminder email 3–7 days before the trial ends. Include the upcoming charge amount and a direct link to cancel.

Update Your Terms of Service

Your terms of service should clearly state:

• How subscriptions work (billing cycle, payment method, currency)
• How to cancel (with a direct link to the cancellation page)
• What happens after cancellation (access period, refund policy)
• How free trials convert to paid subscriptions
• How price changes are communicated

Checklist: Are You Compliant?

• Pre-subscription disclosures are visible before payment details are entered
• Separate affirmative consent for recurring charges (not pre-checked)
• Cancellation is available online if sign-up was online
• Cancellation takes no more steps than sign-up
• No mandatory phone calls or chat agent interactions
• At most one save/retention offer before cancellation completes
• Cancellation confirmation is sent via email
• Free trial conversion terms are clearly disclosed
• Pre-conversion reminders are sent (required in CA, OR; recommended everywhere)
• Terms of service include clear cancellation instructions

What This Means for Your Legal Pages

If you run a subscription business, your terms of service and privacy policy need specific language addressing:

• Auto-renewal and subscription billing terms
• Cancellation procedures and customer rights
• Free trial terms and conversion disclosures
• Refund policies for subscription payments
• Data retention after subscription cancellation

Having clear, compliant legal pages is not just about avoiding FTC penalties — it builds customer trust and reduces chargebacks and support disputes.