Key Takeaways
- Originally set for May 14, the compliance deadline for the FTC Negative Option Rule, also known as the "click-to-cancel" rule, is deferred to July 14.
- The FTC explained that the original deferral period insufficiently accounted for the complexity of compliance.
- Businesses must comply with obligations related to disclosure, informed consent, simple subscription cancellation methods, and more.
On May 9, 2025, the Federal Trade Commission announced that the Commission had voted 3-0 to delay the deadline for full compliance with the Negative Option Rule, also known as the "click-to-cancel" rule, by 60 days, from May 14 to July 14, 2025. (The rule's prohibition on material misrepresentations went into force in January of this year, and that deadline is unaffected by the delay.) The rule affects businesses offering "negative option features"—including free-to-pay trials and recurring subscriptions—and can trigger civil penalties of up to $53,088 per violation.
The Commission explained that "the Commission has determined that the original deferral period," which had been selected by the Commission during the Biden administration, "insufficiently accounted for the complexity of compliance." It therefore extended the period to come into compliance but committed to "begin enforcing it" as of the new July 14 compliance deadline.
As we have discussed in previous Updates (here and here), the rule imposes the following key obligations on those promoting or offering a negative option:
- A prohibition on misrepresenting any material facts, including material facts concerning the underlying transaction
- A duty to provide clear and conspicuous disclosure of all material terms before obtaining a consumer's billing information in connection with a negative option
- A duty to (1) obtain affirmative, express, informed consent to the negative option separate from the rest of the transaction and (2) offer a simple mechanism to cancel the negative option
The Negative Option Rule faces legal challenges consolidated in the U.S. Court of Appeals for the Eighth Circuit. Though in fall 2025, then-Commissioner Andrew Ferguson and Commissioner Melissa Holyoak dissented to the adoption of the rule (with Commissioner Holyoak issuing a vigorous dissent), under the leadership of now-Chairman Ferguson, in March, the FTC filed a full-throated defense of the rule in the Eighth Circuit. Whatever the outcome of the legal challenges, the FTC has other tools vis-a-vis deceptive and unfair subscription practices, such as Section 5 of the FTC Act and the Restore Online Shoppers Confidence Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
