The Federal Trade Commission (FTC) has officially adopted its long-anticipated “Click to Cancel” rule as a major update to the Negative Option Rule that will have significant implications for businesses offering subscription-based products or services. The rule is currently in effect as of May 14, 2025. If your small business relies on auto-renewing contracts or memberships, it’s time to take a close look at your cancellation processes.

Here’s what you need to know and do to stay compliant and avoid regulatory headaches.

What Is the “Click to Cancel” Rule?

Promulgated in response to a high volume of consumer complaints of unfair or deceptive business practices, the FTC’s “Click to Cancel” rule requires businesses to make it just as easy for consumers to cancel a subscription as it was to sign up. This applies to most negative option marketing practices, including, but not limited to:

• Subscription boxes
• Membership programs
• Recurring billing for digital services
• Auto-renewing service contracts

The rule is designed to combat deceptive retention tactics and protect consumers from being trapped in services they no longer want or need.

Key Compliance Requirements

Here are the rule’s most important components:

1. Equal Ease of Cancellation

If a customer can sign up for a subscription online in a few clicks, they must be able to cancel it online just as easily—without jumping through hoops, navigating confusing menus, or calling customer service.

➡ Small Business Tip: Add a clear, prominent “Cancel Subscription” button to your website or account management page. Avoid hiding cancellation behind multiple screens or requiring phone calls or email confirmations.

2. No More “Dark Patterns”

The FTC is cracking down on manipulative user interfaces designed to discourage cancellation—like guilt-inducing language or misleading button labels.

➡ Small Business Tip: Review your UX/UI design. Avoid wording like “Are you sure you want to throw away all your benefits?” in cancellation flows. Keep it factual and neutral.

3. Prompt Cancellation Processing

Cancellations must be processed promptly. Delaying them by requiring additional steps or imposing waiting periods could lead to enforcement action.

➡ Small Business Tip: Automate the cancellation confirmation process. Once a customer clicks to cancel, trigger an immediate confirmation email and end billing at the end of the current cycle (unless otherwise requested).

4. Clear Pre-Cancellation Disclosures (If You Try to Save the Sale)

If you offer a retention pitch, a discount, or a reminder of features they must come after the cancellation option is presented, and customers must be allowed to decline and proceed without delay.

➡ Small Business Tip: If you want to offer a “Wait! Don’t go!” promotion, make sure it’s optional and doesn’t obstruct the cancellation process.

5. Annual Renewal Reminders

For subscriptions that renew yearly or less frequently, businesses must send clear reminders before the renewal date so customers aren’t caught off guard.

➡ Small Business Tip: Set up automated email reminders 30–45 days before renewal. Include clear cancellation instructions in the reminder.

Penalties for Non-Compliance

Failure to comply with the FTC’s revised rule can result in enforcement actions, including:

• Civil penalties
• Consumer redress
• Injunctions or consent orders

The FTC has made clear it intends to be aggressive in cracking down on non-compliant businesses. Small businesses should not assume they’ll fly under the radar.

How Small Businesses Can Prepare Now

1. Audit Your Sign-Up and Cancellation Processes
• Try canceling your own service as a consumer. Is it simple? Frictionless? Transparent?
2. Update Your Website and User Interface
• Work with your web developer to ensure you meet the “equal ease” standard.
3. Train Your Team
• Make sure your customer service and marketing staff understand the new rules and do not try to deter cancellations improperly.
4. Document Your Compliance
• Keep records of changes made, training provided, and how your processes meet the rule’s standards.

Need Help Navigating Compliance?

At Bell, Davis & Pitt, we help businesses proactively reduce risk and implement best practices. If you need a legal review of your subscription agreements, website terms, or cancellation process, our team is here to help.

Contact us today to schedule a consultation and ensure your business stays one step ahead.