The FTC Delays Enforcement of Negative Option Rule
In a recent decision, the Federal Trade Commission voted to postpone the enforcement of the Negative Option Rule, also known as the “click-to-cancel” rule. This rule requires companies to make it just as easy to cancel a subscription as it was to sign up for it. The rule, initially proposed in 2023, targets businesses that offer physical and digital subscriptions, such as streaming services and gym memberships, through quick and simple signup processes, only to make cancellation a more complicated and time-consuming task.
Under the Negative Option Rule, companies cannot compel customers to cancel subscriptions through a different method than the one used for signing up. This means that if a customer signed up with a few clicks on a company’s website, they should be able to cancel just as easily on the same platform. Additionally, companies must provide relevant information about cancellation before collecting payment information from customers.
Although the rule officially went into effect on January 19, enforcement of certain provisions was postponed until May 14. The FTC has now decided to extend the enforcement delay by an additional 60 days, pushing the deadline to July 14. The commission voted unanimously to approve this extension, citing the complexity of compliance as the reason for the delay.
Despite the postponement, the FTC has confirmed that enforcement will commence on July 14, requiring regulated entities to be in compliance with the rule. The commission also stated that it is open to amending the rule if any issues arise during the enforcement process.
