Can Your Customers Cancel in Two Clicks? If Not, You’re at Risk

merhan5
May 9
3 min read

In April 2025, the FTC finalized the “Click to Cancel” Rule. This rule applies to any recurring payment model, including subscriptions, free trials that convert, and automatic shipments.

Expanding beyond prior regulations like ROSCA (internet-only) and the Telemarketing Sales Rule (TSR) (phone-only), the new Rule applies to all mediums, including online, phone, print, and in-person, covering both B2C and B2B transactions.

Violating the rule could result in fines of up to $51,744 per violation, consumer refunds and potential lawsuits. The FTC has made it clear: enforcement is a priority.

Scope and Applicability

The Rule applies to all “negative option” agreements, where a customer’s silence or inaction leads to recurring charges. Examples include:

Auto-renewing subscriptions
Product shipments are billed periodically
Free trials converting to paid services

Notably:

Covers both consumers and businesses, regardless of company size or sophistication
Supplements, but does not override state laws with stronger consumer protections

Keypoint: 1. No more vague or buried subscription terms

If you’re charging someone regularly, whether it’s monthly software, annual memberships, or auto-shipped products, you must explain the terms clearly and up front, before the customer enters any payment info.

That includes:

Telling them it’s a subscription and how often they’ll be charged
Showing the cost both during the trial and after
Pointing out when the first charge will happen
Showing exactly how to cancel

What to do: Go to your checkout or sign-up flow. Is everything above visible before the user clicks "start trial" or "place order"? If not, fix it. That includes email sign-ups and mobile flows, too.

Keypoint: 2. Consent needs to be separate and obvious

Subscription consent must be clear and separate — no hiding it in the fine print or bundling it with other approvals.

What to do: Use an unchecked checkbox or a separate confirmation step that says something like: “I agree to be charged $29/month until I cancel.”

No grey text, no pre-checked boxes, no fine print. The customer should know they’re signing up for repeat charges.

Keypoint: 3. You need to keep a record of that “yes” for 3 years

It’s not enough that you got consent; you need to be able to prove it later. The FTC wants businesses to either keep a record of each customer’s agreement or design the system so that no one can check out without giving their consent.

What to do: Log the date, time, and version of the terms shown. Tie it to the customer’s ID or email. Store that securely. If you can’t retrieve this information, you’re not compliant.

Keypoint: 4. Cancellation must be easy and through the same method

If someone signs up online, they must be able to cancel online without being forced to call, chat, or go through a maze.

What to do: Check your cancellation process. Is it in the account dashboard? Can it be completed in under 2-3 clicks?

Keypoint: 5. Who Does This Apply To?

This rule isn’t limited to consumer subscriptions. The FTC has made it clear: it applies to any recurring subscription, whether you’re selling to individuals or businesses, including newspapers, magazines, SaaS platforms, memberships, recurring services, and automated shipments, even when the buyer is a large enterprise.

What to do:

Treat B2B and B2C subscriptions the same in terms of compliance.

📌 Additional Key Points Worth Knowing:

FTC enforcement will increase. Subscription models are already a top enforcement priority, and this rule gives the FTC more power to act.
This rule does NOT override state laws. Some states, like California, have stricter rules. You must follow both federal and applicable state laws.
Proposed “reminder emails” and “cancel save offers” were dropped for now, but the FTC may add them in a future rulemaking round. These are still under review.
Some trade associations are challenging the rule in court, but the FTC believes most requirements already fall under existing laws (like ROSCA and Section 5 of the FTC Act), and that they are enforcing them accordingly.

📋 Quick Summary Checklist
Step	Task
1	Audit your subscription and trial flows
2	Make sure the terms are visible before payment
3	Add a separate step to get agreement for recurring charges
4	Store consent records for at least 3 years
5	Ensure your cancellation method is quick and matches the signup method
6	Apply this standard across both B2C and B2B flows
7	Review state laws (especially CA) to ensure full coverage