Subscription services are a core marketing tool in today’s economy. But the Federal Trade Commission (FTC) is increasingly concerned that many “negative option” programs—where a customer’s silence is treated as consent for a recurring charge—are trapping consumers in unwanted purchases. The FTC is now exploring rules to overhaul subscription practices.
Why the FTC is Starting Over
The FTC’s first attempt to modernize the subscription rules (starting in 2019) was struck down by a federal appeals court—not on the merits, but because the FTC failed to follow proper legal procedures. Rather than appeal, the FTC launched a new Advance Notice of Proposed Rulemaking (ANPRM) signaling its commitment to policing subscription practices.
Recent Developments
The current Negative Option Rule narrowly targets “prenotification plans”—programs where companies send advance notices of upcoming items (like monthly book‑club selections) and ship and charge consumers unless they decline. To address modern subscription models, the FTC has relied on a patchwork of other laws, including the Restore Online Shoppers’ Confidence Act (ROSCA), the Telemarketing Sales Rule (TSR), and Section 5 of the FTC Act.
The ANPRM asks whether the Rule should be modernized to reach automatic renewals, free-trial conversions, and other contemporary negative option marketing. The rulemaking solicits comments on many aspects from the vacated rule, including misrepresentation prohibitions, consent mechanisms, disclosure obligations, and simple cancellation methods as well as possible exemptions for certain industries, compliance obligations for third parties (such as payment service providers and subscription management providers), and supporting economic and empirical data.
FTC Rulemaking Process
FTC rulemaking is slow; finalizing a new rule could take 18 months or more (the vacated rule attempt took approximately 5 years). However, given the agency’s extensive past efforts, we expect this effort to move quickly. Importantly, the ANPRM does not guarantee the Rule will be reissued—public comments will be key in determining next steps.
Key Takeaways:
- “Click-to-cancel” is not going away. The Eighth Circuit vacated the 2024 Rule on procedural grounds but did not reject its substantive requirements. The Commission is clearly signaling its intent to reimpose requirements for simple cancellation mechanisms. Businesses should consider evaluating their current cancellation flows now rather than waiting for a final Rule.
- Enforcement never stopped. The FTC retains robust enforcement tools under Section 5, ROSCA, the TSR, and other statutes. Companies should not treat the vacatur of the 2024 Rule, or the restart of the rulemaking process, as a reprieve from scrutiny.
- Engage in the Process. Businesses, industry groups, and other stakeholders should submit comments addressing the operational realities of compliance. This is the best opportunity to shape the final requirements before they are set in stone.
