Under the FTC's 'click to cancel' rule, businesses are required to simplify the process for customers to terminate subscriptions

The Federal Trade Commission (FTC) has implemented a 'click to cancel' regulation mandating that companies offering subscription services must enable customers to cancel subscriptions as easily as they can initiate them.

This regulation also requires that vital details pertaining to these services be transparent, honest, and accessible, ensuring that consumers are fully informed before enrolling. Firms need to show proof that consumers understood what they were signing up for.

On its website, the FTC states that non-compliant companies will face "redress and civil penalties." The rule is set to be enforced across the United States 180 days from now.

This regulation is a segment of an update to the 1973 Negative Option Rule, which addresses scenarios where businesses continue billing without customer intervention to terminate the agreement. This includes automatic renewals for services like Xbox Game Pass, PlayStation Plus, and Nintendo Switch Online.

The update seeks to reform the Negative Option Rule to counter dishonest practices related to subscriptions, memberships, and recurring payments, especially in today's digital economy which facilitates easy enrollments.

Chair of the FTC, Lina M. Khan, stated, "Often, companies create numerous obstacles for canceling a subscription. The FTC's new rule aims to eliminate these tactics, saving consumers both time and money. No one should be trapped in a service they wish to leave."