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Consumers irked by the difficulty of unenrolling from some subscription services will gain relief May 14, when merchants must be compliant with the Federal Trade Commission’s revised Negative Option Role, otherwise known as click to cancel. Merchants, however, have a lot of work between now and then.
The rule, which was finalized in October, mandates that the process of unsubscribing must be as quick and easy as the enrollment process. It also spells out that consumers must know what they are signing up for and that sellers must be able to show that consumers knew what they agreed to before enrolling in a subscription plan. The rule was proposed in March 2023.
“The FTC’s revised Negative Option Rule is a wake-up call for businesses to rethink their approach to user data privacy and transparency,” Sam Peters, chief product officer at ISMS.online, a U.K.-based compliance management service, tells Digital Transactions News via email.
“With the May 14, 2025, compliance deadline fast approaching, organizations must act swiftly to align with the new requirements,” he says. “While the timeline is tight, it does highlight the importance of prioritizing consumer rights and trust, and makes this an opportunity for organizations to strengthen compliance practices whilst also enhancing customer trust.”
The 120-day window between the rule’s effective date, Jan. 14, and its compliance date, May 14, will give businesses time to “align their subscription and cancellation process with the new requirements,” says Michael Seaman, chief executive of St. Louis-based payments provider Swipesum. “While this timeframe is generally reasonable, some businesses may remain unaware of the new rule.”
One big concern for recurring payments is churn, the turnover rate of subscribers falling off their lists. One way to counter a potential increase in the churn rate is with proactive messaging.
“It’s also important to point out that organizations should ensure they offer proactive notifications of upcoming renewals and consistent, multichannel messaging to meet these new requirements but also so they reinforce trust and demonstrate a commitment to meeting regulatory and consumer expectations,” Peters says.
“Those organizations that focus on clarity and transparency in their messaging and use simple, consumer-friendly language to ensure customers understand their rights and options will be in a much stronger position than those that don’t, which could also mean a competitive advantage in the market,” he adds.
Consumer messaging is important, but there’s help.
“As the compliance deadline approaches, merchants should adjust their messaging strategies to align with the new regulations,” Seaman says.
Practical help for merchants can come from subscription-services companies like Recurly Inc. and Chargebee, Seaman says. These companies have published content and resources to guide business through compliance with subscription management regulations, he says, “but the burden is ultimately on the merchant.”
It is unlikely the rule will be rescinded, Seaman says, because it’s already faced a number of challenges.
“It’s important to note that the rule aims to protect consumers from deceptive subscription practices. It has faced legal challenges from industry groups like the NCTA, an association for the Internet and television industry.” That association, along with the Interactive Advertising Bureau and the Electronic Security Association, filed a lawsuit against the FTC in October to stop the rule, though no further court action has occurred yet.
“Everyone knows those are some of the hardest services to cancel, customer experience is poor, and overcharges are ridiculous. This [rule] is a good thing,” Seaman says.
