FTC’s Disclosure, Consent, and Cancellation Rules effective May 14, 2025.
SUMMARY
On October 16, 2024, the Federal Trade Commission (FTC) released new regulations requiring certain disclosures, consent, and simple cancellation features for companies that utilize negative option features in their contracts. A “negative option feature” means that if a customer doesn’t actively cancel or opt-out, the service provider will treat their inaction as agreement to continue the service. Common examples include:
- Automatic Renewals: Your subscription renews at the end of the period unless you cancel before the renewal date.
- Continuity Plans: You keep receiving a product or service (like monthly service or streaming access) until you choose to stop.
- Free-to-Pay or Fee-to-Pay Conversions: A free trial automatically turns into a paid subscription unless you cancel before the trial ends.
- Pre-Notification Plans: You’re notified in advance of a product shipment or service charge, and unless you cancel, it proceeds as planned.
THIS MAY APPLY TO YOU IF…
- Your company utilizes Negative Option Features in its contracts with customers.
ACTION ITEMS & TIMELINE
- 16 C.F.R. Part 425’s rules concerning Negative Option Features will become effective May 14, 2025. This includes the disclosure requirements, consent requirements, and “click-to-cancel” requirements.
NEXT STEPS & VANTAGE POINT ASSISTANCE
Vantage Point can help identify whether the rules are applicable to your company and work alongside your corporate counsel to achieve compliance.
