Enforcement of the Federal Trade Commission (FTC) Click-to-Cancel Rule (Rule) has now been deferred to July 14, 2025.
The FTC noted that enforcement of the Rule did not adequately consider the compliance burdens businesses would face in meeting all the facets of the Rule. In deferring enforcement of the Rule, which was last set for May 14, 2025, the FTC sought to provide more time for businesses to ensure that their disclosure, consent, and cancellation practices are compliant with the Rule. Interestingly, the FTC left open the possibility to revisit the Rule and make any changes to address problems that are exposed with enforcement (see https://www.ftc.gov/system/files/ftc_gov/pdf/negative-option-rule-delay-commission-statement.pdf).
As noted in our earlier legal alert, the Rule states that any company or business misrepresenting material facts in selling any good or service with a negative-option feature is considered an unfair or deceptive act, in violation of Section 5 of the FTC Act on deceptive trade practices (see https://www.ftc.gov/system/files/ftc_gov/pdf/negative-option-rule-delay-commission-statement.pdf). The Rule further requires businesses to comply with providing consumers with clear terms regarding the recurring charges of a transaction and aims to prevent making it more difficult for the consumer to cancel the transaction than it was to sign up for the transaction. Further, the Rule makes it a requirement for a business to obtain express informed consent from a consumer to a negative-option feature transaction. A negative option is an offer or agreement to sell or provide any goods or services “under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(w).
Although the FTC may further revise and/or delay enforcement of the Rule, businesses should prepare for full FTC enforcement of the Rule by the new July 14, 2025, enforcement date.
