Enforcement Begins July 14, 2025.
SUMMARY
On October 16, 2024, the Federal Trade Commission (FTC) released new “Click-to-Cancel” 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 of Negitive Option Features 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.
Violations are treated as unfair or deceptive practices under Section 5 of the FTC Act, with penalties up to $51,7444 per violation (and multiple violations can occur in one transaction).
THIS MAY APPLY TO YOU IF…
Your company utilizes Negative Option Features in its contracts with customers.
ACTION ITEMS & TIMELINE
Enforcement of Click-to-Cancel regulations will begin next week on Monday, July 14.
NEXT STEPS & VANTAGE POINT ASSISTANCE
Vantage Point can work alongside your corporate counsel to ensure any Negative Option Features your company uses comply with the new Click-to-Cancel requirements to avoid potentially costly violations.
