What Is the Click-To-Cancel Rule and Why Does It Matter to Your Brand?

Following more than 16,000 comments from consumers and federal and state government agencies, consumer groups, and trade associations, the US Federal Trade Commission (FTC) announced a new “Click-To-Cancel” rule to make it easier for consumers to cancel subscriptions and memberships. Expected to take effect in April 2025, the new rule affects companies that offer automatically renewing subscriptions, free trials that convert to paid subscriptions, and recurring product shipments.

To help brands understand the new rule and how it might impact their business, we’ve put together a short guide. Let’s dive in.

What is the Click-To-Cancel rule?

The “Click-To-Cancel” rule is a regulation announced by the FTC in October 2024 that requires brands to make it as easy to cancel subscriptions as it was to sign up. It is in recognition of the growing ease with which consumers can sign up for services online, but the difficulty they may face when canceling.

Specifically, the rule applies to “negative option programs”—typically memberships and subscriptions—that take customers’ lack of action as tacit consent to renew their payment plan for another year.

It’s always been a grey area, given that customer inaction may simply be because they don’t realize they’re still being charged. The “Click-To-Cancel” rule now puts the onus on the brand to clearly and conspicuously disclose their negative option program and make it simple for them to cancel.

The rule does not require that brands obtain consent to continue subscriptions or memberships each year—but they must disclose the nature of the program and the frequency of its charges in advance of receiving the customer’s billing information, and obtain “express informed consent” to enroll the customer in a recurring payment program.

6 key tenets of the Click-To-Cancel rule you need to know

1. Method: Consumers must be able to cancel the same way they signed up (e.g. if someone signs up online, you can’t require them to call your company in order to cancel).
2. Ease: Canceling must be as easy as signing up.
3. Promptness: Brands must process cancellations promptly and halt charges.
4. Visibility: Brands must prominently display cancellation buttons or links.
5. Disclosure: Brands must disclose all material terms upfront, including the amount and frequency of recurring charges, the date by which a consumer must cancel to prevent recurring charges, and how to cancel.
6. Consent: Brands must obtain “express informed consent” from consumers for any negative option program and keep a record of that consent for three years

For more information, visit the FTC Click-To-Cancel announcement

Is my business subject to the Click-To-Cancel rule?

The Click-To-Cancel rule applies to businesses under the FTC’s jurisdiction offering negative option programs, which include services that automatically renew, convert free trials into paid subscriptions, or otherwise use a customer’s inaction as an agreement to continue payments. It will impact a large number of sectors, including fitness, retail, publishing, subscription, software and streaming services, and more.

If your business bills US customers on a recurring basis and relies on implicit consent to do so, you may be subject to Click-To-Cancel. You should seek legal advice if you need support to understand whether you are subject to the Click-to-Cancel rule or not.

Likely impact of Click-To-Cancel rule on businesses

If you are subject to the Click-To-Cancel rule, you will likely need to change elements of your sign-up and retention process in order to comply with it, and are likely to experience some short-term impact as a result of the change.

While it would be nice if all of your subscribers are willing and active recipients of your product or service, some may be there in error because they forgot they’d signed up or couldn’t work out how to cancel. As a result, the new rule may increase opt-out rates, reduce your customer base, and affect recurring revenue. However, there are ways for businesses to bolster their customer retention at this time.

Looking on the brighter side, the ruling is also an opportunity to rebuild your subscriber list with loyal customers and brand advocates who really want to be there. Plus, simplifying cancellations and complying with relevant legislation can improve customer trust. This can boost your brand, attract new customers, improve customer loyalty, and increase lifetime value, all which helps mitigate risk associated with increased cancellations.

While set-it-and-forget-it tactics might work short-term, they’re not a solid foundation for strong customer relationships. People-first regulation encourages brands to be better partners to their customers and to deliver—and derive—more value from those relationships.

It’s time to make your offer irresistible

As Click-To-Cancel takes effect, brands will need to focus much more on the customer experience to support retention.

• What value are you offering and how are customers benefiting?
• Are you clearly communicating that value in ways that build loyalty?
• What are you doing to recognize and reward long-term commitment?

Businesses must develop creative, compelling strategies to showcase their value, guide customers through meaningful actions, and foster lasting positive interactions. The goal isn’t to retain customers through stealth or friction; it’s to inspire an enthusiastic, intentional re-subscription from happy customers.

4 retention tactics for subscription and membership offers

1. Make processes transparent and friction-free

Review your subscription and cancellation processes to remove friction within the journey. Actively communicate with customers at renewal time using a cross-channel approach that pairs in-app/on-site and outbound messages around how to unsubscribe, but include a reminder of the value customers receive in connection with their subscriptions. For example, a meal-kit brand could remind time-poor customers of the time the service has saved them, or the amount of food waste that was avoided for those who care about sustainability.

2. Help users make the most of membership

Sometimes customers leave because they’re just not getting the value they expected. You can prevent people from lapsing by helping them activate their membership and become habitual service users.

For example, you could leverage an in-app demo to help users complete their top tasks, or offer personalized recommendations (especially those powered by AI) that get people to your core value, fast. Use gamification to encourage people to build the habit of using your service, encouraging engagement streaks and loyalty program enrollment.

3. Predict and proactively prevent churn

Keep an eye on customer sentiment throughout the lifecycle. Simple actions like collecting feedback through surveys can help you spot early signs of dissatisfaction and take corrective action.

Predictive analytics tools can spot trends that predict the likelihood of churn, so you can reach out to at-risk segments with personalized retention offers or re-engagement campaigns, stopping churn before it happens.

4. Win back lapsed subscribers

Just because you lose a customer, it doesn’t mean they’re gone forever. Design creative win-back campaigns to re-engage former fans, such as limited-time offers, loyalty incentives, or exclusive new features to entice them back. Remind them of the value they used to enjoy and are now missing.

Final Thoughts

Businesses shouldn't fear the FTC's Click-To-Cancel rule. It is a great opportunity to double down on best practices in customer engagement, which can support stronger customer loyalty and higher lifetime value.

Transparent processes do not only support compliance with Click-To-Cancel—they also build consumer trust. You may find new customers are more inclined to subscribe when they’re confident there are no hidden catches.

Looking to see how other brands use best-in-class customer engagement strategies to retain customers and drive growth? Check out KFC's winning approach to activation, retention, and monetization.

Forward Looking Statements

This blog post contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the performance of and expected benefits from Braze and its products. These forward-looking statements are based on the current assumptions, expectations and beliefs of Braze, and are subject to substantial risks, uncertainties and changes in circumstances that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Further information on potential factors that could affect Braze results are included in the Braze Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2024, filed with the U.S. Securities and Exchange Commission on December 10, 2024, and the other public filings of Braze with the U.S. Securities and Exchange Commission. The forward-looking statements included in this blog post represent the views of Braze only as of the date of this blog post, and Braze assumes no obligation, and does not intend to update these forward-looking statements, except as required by law.