In the U.S., new laws are altering how subscription businesses must engage with their customers. In mid-July, the FTC modified its Negative Option Rule to address “negative option” arrangements, that charge you unless you explicitly opt out.
Lawmakers contend that it is unrealistic to expect people to remember to cancel, which is why the trend is moving toward a more straightforward and uncomplicated cancellation procedure known as the Click-to-Cancel law approach.
States including California, Arkansas, Colorado, Massachusetts, New York, Maine, Maryland, and Connecticut updated or expanded their own regulations at the same time. The general concept is the same, even though differences among states may apply: prior notice of price changes, explicit consent before auto-renewal, and the ability to cancel using the same method used to sign up.
What changed at the federal level
Three fundamentals are the focus of the FTC’s revised Negative Option Rule, which goes into effect in mid-July: explicit disclosure of renewal terms, consumer affirmative consent, and cancellation procedures that don’t put consumers through unnecessary headaches. Practically speaking, this means businesses that use “keep charging unless you cancel” models need to make opt-out tools more accessible and user-friendly. The spirit of a Click-to-Cancel law is becoming more prevalent: if you signed up online, you should be able to cancel online; if prices are going up, you should be informed beforehand; and if a company is trying to convince you to stay with a discount, that offer shouldn’t conceal or postpone a clear “cancel now” option.
States are adding protections that align with local priorities on top of the federal baseline. Certain regulations highlight precise placement of cancellation buttons, channel parity (cancel the same way you signed up), and clear timing (for instance, how many days prior to renewal you must be notified).
Law highlights by state that you should be aware of
California (starting on July 1)
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If a company offers any discounts or retention incentives. There must be a button on the same page that instantly cancels the service.
- Automatic renewal terms require affirmative consent.
- Before raising prices, businesses are required to give customers seven to thirty days’ notice.
- Customers must be able to cancel through the same channel that they used to register.
Arkansas (starting on August 3)
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Adopted a nearly identical update to California’s strategy, which included prohibitions on “obstructing or delaying” a shopper’s ability to cancel as well as same-channel cancellation.
Colorado (starting on February 16)
- Included business-to-business subscriptions to its current legislation.
- Businesses must be given a one-step online cancellation link when they purchase from another company.
Massachusetts (starting on September 2, “Final Regulations”)
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Mandates that companies give customers notice of any changes to their subscriptions at least thirty-one days before the renewal.
New York (starting on November 5)
- If a business wants to raise the price of a subscription, it must either get the customer’s approval or permit cancellation within 14 days of the increased fee being implemented.
- Before requesting billing information, a point-of-sale disclosure must be made.
Maine (starting on January 1)
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Requires separate consent, especially for the subscription’s automatic renewal feature.
Maryland (starting on June 1)
- The first state to enact such clear auto-renewal restrictions.
- Businesses are required to notify customers in advance of the expiration of any free trials or discount periods that last longer than 14 days.
- The company must offer a prominent and obvious alternative cancellation option if customers are unable to cancel through an online account.
Connecticut (starting on July 1)
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Establishes strict rules for phone cancellation.
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Voicemails requesting cancellation must be answered by businesses within one business day.
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They must inform the caller that they can cancel at any time before offering any discounts or retention benefits.