FTC's New "Click to Cancel" Rule Explained
Sep 24, 2025
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11 min read
Contents
The Federal Trade Commission (FTC) introduced the "Click to Cancel" rule to simplify the process of canceling subscriptions and memberships for consumers.
The rule was originally set for enforcement in May 2025, but was ultimately vacated. Although it never came into force, its principles continue to influence compliance expectations and consumer protection laws.
In this article, we will explain why the FTC created the vacated rule, the current legal landscape, and what fintech companies should keep in mind moving forward.
InnReg is a global regulatory compliance and operations consulting team serving financial services companies since 2013. If you need assistance with compliance or fintech regulations, click here.
What Is the FTC Click-to-Cancel Rule?
The FTC announced its final "Click to Cancel" rule in October 2024 as part of its broader efforts to combat deceptive practices. Its purpose was to provide transparency and protect consumers from being trapped in subscriptions they no longer want or need.
At its core, this rule required businesses to provide a cancellation process that is as simple and seamless as the subscription process. For instance, if customers could sign up for a service with a few clicks online, the company would also need to allow cancellation through a similarly quick and straightforward method.
The "Click to Cancel" rule would have targeted all industries, with particular significance for fintech companies. That’s because fintechs typically use subscription models for services like budgeting tools, robo-advisors, and premium financial insights.
The rule was initially scheduled for enforcement in May 2025 and later delayed to July 14, 2025. Just before that date, the Eighth Circuit Court of Appeals vacated the rule, finding that the FTC had failed to follow required procedural steps. As a result, the rule is not currently in effect and its future is uncertain.
Why This Rule Matters
Even though the appellate court vacated the “Click to Cancel” rule, its addressable issues are still highly relevant. Consumers continue to report frustration with overly complicated cancellation processes, while regulators still view subscription traps as a priority area of focus.
Here’s why this topic matters:
Protecting Consumer Rights: Consumers expect clear, accessible ways to manage subscriptions. Eliminating hidden cancellation options, excessive steps, or unnecessary retention tactics helps avoid complaints and regulatory attention.
Enhancing Business Reputation: Offering straightforward cancellation demonstrates a commitment to fairness. Companies that reduce friction in the cancellation process could see improved trust and brand loyalty.
Mitigating Compliance Risk: While the Click-to-Cancel rule itself is not in effect, existing frameworks such as the Restore Online Shoppers Confidence Act (ROSCA), the FTC Act, and state-level automatic renewal laws continue to require transparency. Non-compliance can result in investigations, fines, or lawsuits.
Adapting to Consumer Expectations: Modern consumers value convenience and transparency. Offering a seamless cancellation process aligns with these expectations and improves customer satisfaction in the long run.
Examples of Fintech Companies Using Subscription Models
The principles behind the Click-to-Cancel rule still offer helpful guidance for companies, such as:
Revolut: Offers subscription-based digital banking services, including premium features such as international transfers and cryptocurrency trading. Compliance with the "Click to Cancel" rule would require Revolut to make these premium services just as easy to cancel as they are to subscribe to.
Acorns: A fintech platform providing services related to robo-investing and micro-investing. As of 2025, the company’s primary revenue driver is three subscription tiers: Lite ($1/month), Personal ($3/month), and Family ($5/month), each offering a suite of products tailored to different investment needs. To comply with the "Click to Cancel" rule, Acorns could make it possible for users to easily cancel their subscriptions directly within the app or website without unnecessary steps, regardless of the tier selected.
Creditspring: Founded in 2016, Creditspring offers loans with fixed borrowing costs through a membership fee model, eliminating interest charges. The company has issued more than £400 million in loans via over a million transactions. To adhere to the "Click to Cancel" rule, Creditspring could offer a simple and transparent process for canceling memberships while clearly outlining how cancellations may affect access to future loans or borrowing benefits.
Key Elements of the FTC Click-to-Cancel Rule
The Click-to-Cancel framework highlighted four core practices that still reflect regulator expectations and consumer demands:
1. Misrepresentations
The rule would have prohibited deceptive tactics that made cancellations difficult or discouraged consumers from unsubscribing. For example, companies could not claim users would lose access to essential free features if they canceled a paid subscription unless that claim was accurate. It would also have barred misleading retention tactics, such as exaggerating the benefits of staying subscribed.
2. Disclosures
Businesses would have been required to provide clear terms and conditions when consumers enrolled in a subscription, including details about cost, renewal, duration, and cancellation methods. Ongoing clarity, such as visible links in dashboards or straightforward instructions in emails, was also emphasized.
3. Consent
The rule aimed to require explicit consent before consumers were enrolled in a subscription. Pre-checked boxes or vague opt-in mechanisms would not have been acceptable. Instead, companies would have needed active confirmation, such as an unchecked box or digital signature, before charging recurring fees.
4. Simple Cancellation Mechanism
Perhaps the most visible aspect of the rule was the requirement for cancellation to be as simple as signing up. Companies would not have been able to require excessive steps, long phone calls, or complicated navigation. A few clicks online in the same interface used to subscribe would have been sufficient.
Implications for Fintech Companies Using Subscription Models
Subscription models are critical for fintech companies offering services like robo-advisors or premium analytics platforms. Although the Click-to-Cancel rule will not take effect, the challenges it identified are still relevant. Businesses that address these areas can reduce compliance risk and improve customer loyalty.
Streamlining Subscription Models
Companies should review subscription and cancellation processes to confirm they are simple, transparent, and aligned with existing laws. Regulators already consider overly complex processes like requiring customers to call support problematic.
Building Consumer Trust
Simplifying subscription terms and cancellation processes helps fintechs demonstrate a commitment to fairness and strengthens customer relationships. This is especially important given the sensitivity of financial data.
Potential Compliance Risks
While the vacated rule itself no longer applies, the FTC and state regulators continue to bring enforcement actions against deceptive subscription practices. Non-compliance with existing frameworks can still result in fines, lawsuits, and reputational damage.
Unique Challenges for Subscription-Based Fintechs
Even without the Click-to-Cancel rule in place, fintech companies still wrestle with unique challenges when they're building cancellation processes. It's not just about adding a cancel button. These companies handle sensitive financial information, juggle complex subscription tiers, and operate under intense regulatory scrutiny. All of that makes creating a smooth cancellation experience trickier than it might seem at first glance.
1. Balancing Compliance and Security: Cancellations should be easy for legitimate users but still protected against fraud or unauthorized access. It can be challenging to strike the right balance between usability and strong identity verification.
2. Maintaining Customer Retention: Easier cancellation options can contribute to higher churn. Companies need to focus on product value, feature improvements, and proactive customer engagement rather than relying on barriers to keep users subscribed.
3. Navigating Cross-Border Compliance: Fintechs operating internationally must account for varied subscription regulations in different jurisdictions, which adds complexity to designing a unified system.
4. Integrating Compliance into Existing Infrastructure: Older infrastructure may not support modern cancellation workflows. Upgrading systems to allow features like automated cancellations, accessible dashboards, and real-time notifications often requires significant investment.
6. Educating Customers: Users may not always understand the consequences of canceling a subscription, such as losing access to data or tools. Clear communication about these impacts helps prevent confusion and complaints.
Steps to Achieve Compliance with the Click-to-Cancel Rule
For fintech companies, creating transparent and user-friendly subscription processes isn't just about checking regulatory boxes. It's actually a chance to build stronger relationships with your customers. When you clarify and simplify these processes, you're meeting legal requirements while also showing customers you respect their time and choices. But getting there takes more than good intentions. You need a systematic approach that covers everything from the moment someone signs up to the day they decide to leave.
See also:
1. Audit Existing Subscription Models
Conducting a thorough audit of your subscription processes is the first step in simplifying cancellations and achieving compliance. Start by identifying any overly complex or unclear cancellation procedures that may hinder the customer experience.
Next, assess whether your sign-up process is as straightforward as the cancellation process to be consistent across both. Additionally, review all customer communications, such as emails, invoices, and dashboards, to confirm they clearly guide users through the cancellation steps.
This comprehensive evaluation will highlight gaps and help you prioritize updates to create a seamless and transparent system.
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2. Streamline Cancellation Processes
To create a seamless cancellation process, design a mechanism that mirrors the simplicity of your subscription process. This includes integrating a self-service option directly within the user dashboard or app, making it prominently visible and easily accessible.
The process should be streamlined, allowing customers to cancel in just one or two simple steps without unnecessary obstacles. Avoid adding barriers such as mandatory phone calls, lengthy surveys, or required interactions with customer service unless the customer explicitly requests them.
Regular user testing can also help refine the system, meeting consumer expectations for ease and efficiency.
3. Align Policies and Train Teams
Update internal policies and procedures to reflect fair, transparent subscription practices. Follow this with targeted training for key teams, particularly customer service and compliance staff, so they can consistently apply these standards in customer interactions.
Customer support teams should also move away from retention-focused tactics like misleading claims or confusing alternatives, as these practices are non-compliant and erode trust. Instead, equip your employees with the ability to manage cancellations with transparency, respect, and a clear understanding of legal obligations.
4. Enhance Communication and Transparency
Use straightforward, concise language in all communications and avoid legal jargon or overly complex instructions. Also, provide detailed cancellation guidance in onboarding materials, account settings, and email confirmations so that customers always know how to opt out if necessary.
Additionally, send renewal reminders that include clear cancellation steps for those who choose not to continue. This transparency minimizes confusion, enhances the customer experience, and builds long-term trust.
5. Leverage Technology for Automation
Automation does the heavy lifting on compliance while cutting down on mistakes that happen when everything's manual.
Set up systems that process cancellations right away and give users instant confirmation. Nobody wants to wait around wondering if their cancellation went through. Your analytics tools can also help you spot cancellation patterns and catch problems before they become bigger issues.
When you automate these processes, you're not just staying compliant. You're making life easier for your customers and your team. It's a win across the board.
6. Test and Iterate
After implementing changes, test your subscription and cancellation workflows regularly. Collect customer feedback to identify pain points and refine the process for a smoother experience.
Periodic reviews are also essential to make sure your systems stay aligned with evolving regulations and meet consumer expectations.
Common Pitfalls and How to Avoid Them
Even without the FTC’s Click-to-Cancel rule in effect, businesses still encounter challenges when managing subscription processes. For fintech companies, avoiding common pitfalls is essential to reducing compliance risk, protecting their reputation, and building customer trust.
Below are some of the key issues fintechs often face:
See also:
1. Misleading Marketing Practices
Companies often bury the truth about their subscription terms. They'll tuck cancellation policies deep in the fine print or make unsubscribing sound easier than it actually is. Sometimes the marketing copy promises "cancel anytime," while the actual process involves calling during business hours and waiting on hold. These tactics don't just break rules. They break trust.
How to Avoid: Put your subscription terms front and center in all your marketing. Tell people exactly how they can cancel, using language anyone can understand. Skip the legal jargon. Make your cancellation policy as visible as your signup button. If customers have to hunt for this information, you're doing it wrong.
2. Inadequate Consent Mechanisms
Pre-checked boxes and sneaky opt-ins were exactly what the rule targeted. You know the type: buried agreements that somehow sign you up for a subscription when you thought you were just creating an account. When customers realize they've been enrolled without really agreeing to it, disputes and chargebacks follow. And regulators pay attention to those patterns.
How to Avoid: Make consent crystal clear. No pre-checked boxes. No assumptions. Tell customers exactly what they're signing up for, including what happens after free trials end and how much they'll be charged. Every signup flow should spell out the terms in plain sight. Run your consent process by a few people outside your team. If they're confused about what they're agreeing to, you need to fix it.
Silent renewals are a recipe for angry customers. They forget they signed up, see the charge on their statement, and immediately dispute it. Now you're dealing with chargebacks, negative reviews, and possibly regulatory complaints.
How to Avoid: Give customers a heads-up before you charge them again. Send obvious renewal notices, whether through email, push notifications, or in-app messages. Include the renewal date, the amount, and a direct link to cancel if they want out. Make it impossible for them to miss or misunderstand what's about to happen.
4. Neglecting to Update Legacy Systems
Many companies overlook the need to update outdated systems that cannot support simple and transparent cancellation workflows. This creates bottlenecks and increases the risk of errors, making the process more difficult for customers.
How to Avoid: Invest in modernizing your subscription management systems. Automate workflows where possible to streamline processes and reduce errors. Focus on creating an intuitive user experience for both subscribing and canceling.
5. Ignoring Customer Feedback
Pushing aside customer feedback about subscription experiences can leave you with unresolved issues and recurring complaints. This might put you at risk for reputational damage and increased regulatory attention.
How to Avoid: Ask your customers what they think about your subscription process. Don't wait for complaints to roll in. Send surveys, check support tickets, and pay attention to what people say during cancellations. Their frustrations will tell you exactly where your process breaks down.
When someone points out a problem, fix it. Then ask if the fix helped. This constant back-and-forth between you and your users keeps your cancellation process from becoming the thing everyone hates about your product.
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The FTC's Click-to-Cancel rule never made it into law, but the problems it tried to fix haven't gone away. Regulators still care about subscription traps. Customers still hate them. Savvy fintech companies are getting ahead of the curve by making their cancellation processes transparent and painless anyway.
When you make it easy for customers to leave, you're really giving them a reason to stay. Clear communication, straightforward cancellation, and honest business practices do more than keep you out of regulatory trouble. They build the kind of trust that turns one-time users into long-term customers. In a market where switching costs are low and options are everywhere, that trust becomes your competitive advantage.
How Can InnReg Help?
InnReg is a global regulatory compliance and operations consulting team serving financial services companies since 2013.
We are especially effective at launching and scaling fintechs with innovative compliance strategies and delivering cost-effective managed services, assisted by proprietary regtech solutions.
If you need help with compliance, reach out to our regulatory experts today:
Published on Feb 12, 2025
Last updated on Sep 24, 2025
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