BALTIMORE — A new federal rule is expected to make it easier for consumers to cancel subscription services and memberships, with businesses facing fines up to $51,744 per violation for non-compliance. The rule took effect on January 14, 2025, and companies have until May 14, 2025 to comply.
The Federal Trade Commission's "Click to Cancel" rule, also known as the Negative Option rule, will require companies to make cancellation processes as simple as signing up for services.
The FTC received more than 16,000 comments from customers in 2023 after proposing the rule to simplify the cancellation process.
"We've likened it to that old song by The Eagles. It's like the 'Hotel California.' You can check in anytime you like, but you can never leave and that's the way that companies have treated a lot these subscriptions," said Teresa Murray, Director of the Consumer Watchdog program at U.S. Public Interest Research Group.
Murray's organization supports the new rule, which forces companies to make it as easy to opt-out as it is to sign-up.
"If you signed up by phone, you have to be able to cancel by phone. If you signed up online, you must be able to cancel online in as many steps as it took you to sign up to begin with. So none of this rabbit hole stuff," Murray said.
The rule also requires companies to clearly disclose all charges without hidden fees.
"They tell you, hey, the price for this thing is $19.99 a month. And you're like, Oh, this is great. And they don't disclose that after three months, the price actually goes to $49.99 a month, or whatever. Why would a company want to deceive customers that way? We don't get it," Murray said.
John LeTard shared his frustrations on Facebook after struggling to cancel his monthly fitness service.
"My first attempt to cancel was in February, and I got a message back saying that they got what I wanted, and I thought I was canceled. Then at the end of the month, I paid again," LeTard said.
The company claimed he didn't respond to their email, which went to his spam folder. So, he tried canceling again.
"In April, they charge me again. And I was like, Oh, but I filled out the form. And she said, it takes 31 days to fill out the form, but it's only been 30," LeTard said. The service was charging him nearly $500 per month.
Other consumers have commented on social media that companies "make it so hard" to cancel and it shouldn't take a Google search to find out how to cancel.
Businesses and trade associations are pushing back against the new regulation by filing complaints in court. This includes the U.S. Chamber of Commerce arguing that the rule imposes "onerous regulatory obligations" and affects over a billion paid subscriptions in the U.S.
Despite these objections, the FTC plans to begin enforcement on May 14 unless a court issues an injunction, according to a FTC spokesperson. Violators could face civil penalties up to $51,744 per violation, plus consumer refunds and damages.
"People should absolutely push for their rights, fight for their rights, and not just give up because money is precious," Murray said.
Regardless of what happens with this federal rule, consumers should keep track of their subscriptions and terms. While there are apps that can help manage subscriptions, these are also subscription services themselves. Murray recommends setting phone reminders whenever signing up for a new service, with an alert scheduled for the week before renewal.
The rule doesn't replace state laws governing automatic renewals, which 25 states already have, including Maryland. New legislation in Maryland was passed during this last session and takes effect in June 2026. House Bill 107 requires businesses offering automatic renewal contracts to provide consumers with a clear and cost-effective method to cancel such renewals. The bill mandates that renewal offers be conspicuously displayed and include specific information. Businesses found in violation could be subject to penalties administered by the Maryland Attorney General's Office.
To file a complaint with the FTC, click here.
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