Highlights
- Recent lawsuits and settlements with the Federal Trade Commission (FTC) have prompted new compliance requirements for brands that offer auto-renewing products and services.
- Even though the FTC's "Click to Cancel" Rule was voided by the U.S. Court of Appeals for the Eighth Circuit, FTC leadership is reinforcing expectations for companies to provide clear disclosures about auto-renewal terms and offer simple cancellation mechanisms.
- This Holland & Knight alert details how the FTC's recent enforcement actions have led to a compliance road map of the FTC's expectations for businesses offering auto-renewing products or services.
Despite the demise of the Federal Trade Commission's (FTC) "Click to Cancel" Rule in July 2025, the FTC continues to actively define new standards for lawful subscription practices. The FTC's recent lawsuits and settlements with Match.com, Chegg Inc. and Cleo AI establish new compliance requirements – and create new compliance challenges – for brands that offer auto-renewing products and services. The FTC's actions make clear that, going forward, companies must prominently describe all terms of auto renewals and permit seamless cancellation – or risk joining the growing list of brands that the FTC has taken action against.
The FTC's recent enforcement actions set forth a compliance road map for what the FTC expects from businesses offering subscriptions or other auto-renewing products or services. As the FTC continues to prioritize enforcement, understanding the FTC's updated expectations is paramount for affected brands seeking to mitigate their risk and maintain consumer trust in the long term.
Background on FTC Regulatory Landscape
The FTC has long scrutinized negative option marketing – practices where a consumer's silence or failure to take affirmative action results in recurring charges or a renewal of a product or service. The FTC's Click to Cancel Rule (the Rule), which took effect in January 2025, contained updated requirements, but the Rule was recently voided by the U.S. Court of Appeals for the Eighth Circuit after the court found that the FTC failed to follow proper rulemaking procedures.
Despite the Rule being voided, the FTC's enforcement efforts remain robust and undeterred. The FTC has relied on its authority to enforce the Restore Online Shoppers' Confidence Act (ROSCA) and Section 5 of the FTC Act to bring new enforcement actions against companies that the FTC alleges to be engaged in "deceptive" business practices related to their auto-renewing products and services.
Recent public statements from FTC leadership reinforce the FTC's expectations that companies provide clear, conspicuous disclosures about auto-renewal terms and offer cancellation mechanisms that are as simple as the sign-up process. The FTC's actions – particularly against Match.com and Chegg – demonstrate a renewed focus on preventing consumers from being trapped in subscriptions by confusing, burdensome or opaque cancellation procedures. These enforcement actions, coupled with ongoing scrutiny of negative option marketing, signal that the FTC is actively shaping the compliance landscape, with ROSCA and the standards set forth in recent settlements now defining the expectations for businesses.
Recent FTC Enforcement Actions
The FTC's recent enforcement actions against Match.com and Chegg illustrate the FTC's active enforcement posture and provide practical guidance for companies seeking to align with current compliance priorities.
FTC Settlement with Match.com
In its complaint, the FTC alleged that Match.com:
- deceptively induced consumers to subscribe by promising a complimentary six-month subscription without adequately disclosing the requirements to qualify for the free subscription period
- unfairly suspended accounts of users who disputed charges, denying them access to paid services
- made cancellation procedures confusing and cumbersome
The FTC's enforcement action against Match.com culminated in a $14 million settlement to be paid to consumers allegedly harmed by Match.com's practices. The settlement also requires Match.com to:
- clearly disclose all material terms and conditions of its guarantees
- refrain from misrepresenting restrictions or conditions related to guarantees
- cease retaliatory actions against consumers who file billing disputes
- provide simple, accessible cancellation methods
These requirements reinforce the FTC's expectation that businesses must implement transparent, consumer-friendly processes for both enrollment and cancellation.
FTC Settlement with Chegg
Shortly after the Match.com action, the FTC announced a $7.5 million settlement with Chegg, an education technology provider, resolving allegations that Chegg:
- continued to charge consumers after they had attempted to cancel their subscriptions
- made online cancellation options difficult to locate
- created a confusing and cumbersome cancellation process
- failed to improve cancellation accessibility even after being notified of consumer difficulties
The settlement also imposes compliance requirements on Chegg, including that the online cancellation mechanism be easy to find and that Chegg promptly process requests to cancel.
Conclusion: Compliance Takeaways
Across these actions, the FTC has consistently targeted:
- opaque or misleading disclosures about auto-renewal terms
- cancellation processes that are more difficult than sign-up
- practices that frustrate or penalize consumers seeking to cancel
The remedies imposed – ranging from significant monetary penalties to mandated operational changes – demonstrate the FTC's insistence on transparency and ease of cancellation. Collectively, these cases set de facto industry standards. The FTC's enforcement action against Cleo AI established the baseline – clear disclosures, simple, user-friendly cancellation mechanisms and no misleading statements – but the more recent actions show the FTC expects businesses to operationalize these principles as they apply to their business with frictionless processes.
According to the FTC, auto-renewal offers must clearly and conspicuously disclose all material terms, such as pricing, renewal intervals, cancellation rights and restrictions, in a manner that is easy for consumers to find and understand. Cancellation mechanisms must be simple and accessible, matching the ease of enrollment and avoiding unnecessary hurdles or complex procedures. The FTC also expects businesses to avoid potentially deceptive or obstructive practices, such as failing to fully describe cancellation processes, forcing customers to wait multiple days while their cancellation requests are "processed," or retaliating against consumers who dispute charges or attempt to cancel.
Businesses that offer auto-renewing products and services should look to align auto-renewal practices with these requirements. Businesses should consider auditing and updating subscription flows to ensure compliance with the FTC's expectations. Businesses should also plan to monitor both federal and state developments in this space, as state laws may impose additional or evolving requirements.
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.
