FTC adopts 'click-to-cancel' rule, aiming to make it easier to cancel memberships

The Federal Trade Commission finalized a rule Wednesday that seeks to make it easier for American households to cancel their subscriptions and memberships.

The goal is to make it as simple for consumers to opt out of recurring payments -- including for gyms, retailers or other businesses -- as it is to sign up for them.

"Too often, businesses make people jump through endless hoops just to cancel a subscription," FTC Chair Lina Khan said in a statement following the announcement.

"The FTC's rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want," Khan said.

Under the so-called "click-to-cancel" rule, if customers decide to enroll in a subscription online or through an app in one step -- they should be able to cancel that way, too.

Businesses will be required to provide important information -- such as when free trials end -- and to obtain consumers' consent before billing and charging them.

The changes are set to take effect in April 2025. Companies that don't comply could face civil penalties, according to the agency.

The Biden administration announced in August it was working to adopt the rule as part of a broader effort to cut down the time and money Americans spend wrangling with companies over customer service.

"For a lot of services, it takes one or two clicks on your phone to sign up. It should take one or two clicks on your phone to end the service," White House Domestic Policy Advisor Neera Tanden said in August. "Consumers could see the new rule applied to gym memberships or phone and internet companies."

 The U.S. Chamber of Commerce is critical of the initiative, accusing the federal government in a statement of "imposing heavy-handed regulations that micromanage business practices and pricing."

Tanden said at the time that the efforts were about creating a better functioning market, not targeting any particular company or "shaming corporations writ large."

"When they want to end one subscription, they can shop for another, but it's their decision," she said. "That's what a free market is really about, empowering individuals to make the decisions they want to make without these practices that get in their way."

The FTC says it received more than 16,000 comments from consumers, trade associations, watchdog groups, and state and federal agencies since it first floated the proposal in March 2023.