FTC Delays Enforcement of Click-to-Cancel Rule by 60 Days

The Federal Trade Commission (FTC) has announced a 60-day delay in the enforcement of its Negative Option Rule, widely known as the “click-to-cancel” rule. This rule is designed to ensure companies allow consumers to cancel subscriptions as easily as they signed up. The enforcement was originally slated to begin on May 14, but will now commence on July 14.

Initially proposed in 2023, the Negative Option Rule targets businesses that offer subscriptions, both physical and digital, ranging from streaming services to gym memberships. The rule aims to eliminate the common practice where signing up for a subscription is simple, but canceling involves a complex and time-consuming process.

Under this rule, businesses cannot require customers to cancel subscriptions through a different method than how they initially signed up. For instance, if a customer subscribes via a company’s website with a few clicks, they should also be able to cancel through the website. Furthermore, companies must provide all relevant cancellation information before collecting any payment details from the customer.

According to the FTC, while the rule technically went into effect on January 19, the enforcement of specific provisions was initially deferred until May 14. The latest decision extends this delay by an additional 60 days, pushing the enforcement date to July 14. The FTC explained that this further delay is due to an assessment revealing that the initial deferral period did not adequately account for the complexities of compliance.

“Having conducted a fresh assessment of the burdens that forcing compliance by this date would impose, the Commission has determined that the original deferral period insufficiently accounted for the complexity of compliance,” the FTC stated.

The decision to delay enforcement was passed with a 3-0 vote by the commission. Currently, the FTC operates with only three commissioners due to the prior dismissal of two Democratic commissioners, a move that has faced legal challenges. Despite the delay, the FTC has affirmed that enforcement will begin on July 14, at which point all regulated entities must be in full compliance.

The FTC has also indicated a willingness to consider amendments to the rule if enforcement reveals unforeseen problems. “Of course, if that enforcement experience exposes problems with the Rule, the Commission is open to amending the Rule to address any such problems,” the FTC added.