New rule aimed at recurring subscriptions

The FTC announced on Oct. 16 that it has finalized a new “click to cancel” rule aimed at simplifying the cancellation process for recurring subscriptions. The rule, which applies to most negative option plans – such as automatic renewals, free trial conversions, continuity plans and prenotification plans – mandates that consumers must be able to cancel subscriptions as easily as they sign up, through the same medium. It also requires companies to clearly disclose terms and obtain consumers’ affirmative consent before charging them. Refunds will be required in cases of misleading practices or unauthorized charges. The FTC introduced this rule as part of its overhaul of the 1973 Negative Option Rule, targeting the growing prevalence of recurring-payment programs and the challenges consumers face in canceling them. Although the rule is set to take effect 180 days after its Federal Register publication, industry groups have filed a legal challenge, potentially delaying its implementation.