What does the FTC mean by Click-to-cancel?

It means the obligation to make cancellation simple and easy. The Chair's own example was a company that requires you to call customer service to cancel an account you opened on its website, a practice the proposed rule would have put an end to.

Which statute is a business really dealing with when the FTC talks about Click-to-cancel?

For online sales, the statute is ROSCA, 15 U.S.C. § 8403, which requires a simple mechanism to stop recurring charges. The FTC pleads Section 5 of the FTC Act alongside it, because a ROSCA violation is treated as a rule violation and as an unfair or deceptive act or practice under Section 5(a). The 2023 proposal was aimed at the gap that remains because ROSCA applies only to online shopping.

Can a business require customers who signed up online to call to cancel?

Not under the proposed rule, which would have required cancellation to be offered through the same medium as the subscription. The stipulated order in FTC v. Chegg, Inc. points the same way: the simple mechanism must be at least as easy to use as the mechanism the consumer used to consent.

Can a business make a save offer when someone tries to cancel?

Under the proposed rule, only with the customer's express consent. The government's Adobe complaint shows why the point matters: it lists pages devoted to retention offers among the "multiple, unnecessary steps" it alleges blocked online cancellation.

Does the FTC have to show a business knew it was breaking the law to get civil penalties?

Knowledge is part of the penalty authority: the government's complaint describes Section 5(m)(1)(A) as authorizing penalties for each ROSCA violation committed with actual knowledge or knowledge fairly implied.

What is a negative option feature?

It is a provision in an offer or agreement under which the seller treats the consumer's silence or failure to act as acceptance. The Telemarketing Sales Rule defines it as "in an offer or agreement to sell or provide any goods or services, a provision under which the consumer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer," and ROSCA uses that definition.

BillingAgency label

Click-to-cancel

Also known as "Simple cancellation" or "Same-medium cancellation"

Berkeley Robinson, Managing Attorney at Robinson Law Firm PLLC

Author

Berkeley Robinson, Esq.

Managing Attorney, Robinson Law Firm PLLC

Berkeley has served as the go-to counsel for many scaling businesses in a transactional and litigation management capacity. Before becoming an attorney, Berkeley grew sales teams, ran online marketing campaigns, and did everything else an entrepreneur does—and still does today as the founder of two online businesses.

Definition

The government has not defined "Click-to-cancel" in a statute or regulation. The phrase is an agency label for a cancellation standard. In a March 2023 statement on the proposed Negative Option Rule, the FTC Chair used it for a proposal that would amplify ROSCA's simple-cancellation mandate and apply it across all negative option marketing. Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)

The FTC uses "Click-to-cancel" to mean "the obligation to make cancellation simple and easy." Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023) Under that proposal, any cancellation would have to be offered through the same medium as the subscription and be at least as easy to use as the method the consumer used to start the negative option feature. Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)

Key legal rules

These are the rules the government has applied to what it calls "Click-to-cancel":

Under the Restore Online Shoppers’ Confidence Act (ROSCA), 15 U.S.C. § 8403, a seller generally may not charge consumers for goods or services sold in transactions effected on the Internet through a negative option feature unless the seller (1) clearly and conspicuously discloses all material terms before obtaining the consumer’s billing information, (2) obtains the consumer’s express informed consent before making the charge, and (3) provides a simple mechanism to stop recurring charges. Source: Amended Complaint for Permanent Injunction and Other Equitable Relief (quoting 15 U.S.C. §§ 8401, 8403, 8404; 16 C.F.R. § 310.2(u))
The proposed Negative Option Rule would have required any cancellation to be offered through the same medium as the subscription, and the cancellation method "must be at least as easy to use as the method the consumer used to initiate the Negative Option feature." Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)
Under the proposal, a business could still try to persuade customers to stay, such as by offering perks or discounts, but it would have to get the customer’s express consent before doing so. Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)
In the stipulated order in FTC v. Chegg, Inc., the simple cancellation mechanism must be at least as easy to use as the mechanism the consumer used to consent to the negative option feature. Source: Stipulated Order, FTC v. Chegg, Inc.
In the same Chegg order, where cancellation is by telephone, the seller must promptly effectuate cancellations through a number that is answered or records messages, available during normal business hours, not more costly to use than the call the consumer used to consent, and easy to find and clearly displayed on its websites. Source: Stipulated Order, FTC v. Chegg, Inc.
In the joint stipulation for an order against Cerebral, Inc., the cancellation mechanism must not require the consumer to take any action that is objectively unnecessary to cancel, or use a Dark Pattern, meaning a user interface that has the effect of impeding consumers’ expression of preference, manipulating consumers into taking certain action, or otherwise subverting consumers’ choice. Source: Joint Stipulation for Order for Permanent Injunction, Monetary Judgement, Civil Penalty Judgment, and Other Relief Against Defendant Cerebral, Inc.
In the Vonage Holdings Corp. stipulated order, a seller of a good or service with a negative option feature may not misrepresent, expressly or by implication, any material aspect of the terms of a cancellation policy, including whether it is easy for consumers to cancel. Source: FTC v. Vonage Holdings Corp., FTC Matter No. 2023165, Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief

For the sake of space, this page lists only the primary rules related to this term that most businesses should follow. More may apply to your situation, and your unique facts affect how they apply.

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Why these rules exist

The label answers a pattern the Commission majority described in 2023: companies make it easy to sign up for an ongoing good or service and difficult to leave. Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023) The duty exists because that imbalance works on the consumer's patience. If quitting takes far more effort than joining, a person who no longer wants the product keeps paying because leaving costs more than the next charge, and the companies that design cancellation this way are, in the Chair's words, betting that customers will be too impatient, busy, or confused to jump through every hoop. Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)

Beneath the label, the statute the government applies in its cases is the Restore Online Shoppers’ Confidence Act, which Congress passed because consumer confidence is essential to the growth of online commerce. Source: Amended Complaint for Permanent Injunction and Other Equitable Relief (quoting 15 U.S.C. §§ 8401, 8403, 8404; 16 C.F.R. § 310.2(u)) The Commission's 2023 proposal was meant to reach further than that statute because, as the Chair put it, "TSR applies only to telemarketing, ROSCA only to online shopping, and the existing Negative Option Rule only to prenotification plans." Source: Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)

Enforcement examples

United States v. Adobe Inc. (software subscription plans)

Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (June 17, 2024)

Adobe is alleged to have deterred cancellation. According to the complaint, consumers cancelling online had to navigate hidden cancellation buttons and multiple unnecessary steps, including pages devoted to password reentry, retention offers, surveys, and warnings. Source: Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Adobe Inc.) Those who tried phone or chat allegedly met dropped calls and chats, significant wait times, and repeated transfers. Source: Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Adobe Inc.) The complaint further alleges that Adobe disclosed the early termination fee clearly only when subscribers tried to cancel. Source: Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Adobe Inc.)

Outcome. Count III alleges that Adobe failed to provide simple mechanisms for a consumer to stop recurring charges, in violation of ROSCA. Source: Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Adobe Inc.) (June 17, 2024) The United States sought injunctive relief, civil penalties, and equitable monetary relief. Source: Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Adobe Inc.)

FTC v. Fitness International, LLC (gym memberships)

Amended Complaint for Permanent Injunction, Monetary Judgment, and Other Relief

Two gym chains were alleged to have enrolled consumers in recurring monthly memberships on their websites or at the gyms, and then to have required cancellation processes that were difficult. One route directed consumers to submit a difficult-to-access form in person at the gym. Source: Amended Complaint for Permanent Injunction, Monetary Judgment, and Other Relief (Fitness International, LLC and Fitness & Sports Clubs, LLC) The other accepted cancellation by mail, with instructions to use certified or registered mail, which requires a trip to the post office and additional costs. Source: Amended Complaint for Permanent Injunction, Monetary Judgment, and Other Relief (Fitness International, LLC and Fitness & Sports Clubs, LLC) The amended complaint added that, when consumers signed up on the websites, the defendants did not clearly and conspicuously disclose how to cancel before collecting billing information. Source: Amended Complaint for Permanent Injunction, Monetary Judgment, and Other Relief (Fitness International, LLC and Fitness & Sports Clubs, LLC)

Outcome. The FTC brought the action for violations of Section 5(a) of the FTC Act and Section 4 of ROSCA, and sought a permanent injunction, monetary relief, and other relief. Source: Amended Complaint for Permanent Injunction, Monetary Judgment, and Other Relief (Fitness International, LLC and Fitness & Sports Clubs, LLC)

FTC v. Age of Learning (ABCmouse children's learning memberships)

ABCMouse, File No. 172 3186: Complaint

ABCmouse is alleged to have prominently promised consumers "Easy Cancellation" while making cancellation difficult for years. Source: ABCMouse, File No. 172 3186: Complaint Rather than accept cancellation by calling, emailing, or contacting it through a customer support form, the company allegedly required consumers to find and navigate a lengthy and confusing cancellation path that repeatedly discouraged them from canceling. Source: ABCMouse, File No. 172 3186: Complaint That path allegedly ran between six and nine screens, and consumers could not skip ahead. Source: ABCMouse, File No. 172 3186: Complaint

Outcome. The complaint alleges that the company failed to provide a simple cancellation mechanism by which consumers could stop recurring charges, and that over at least three years hundreds of thousands of consumers visited the cancellation path but remained enrolled. Source: ABCMouse, File No. 172 3186: Complaint

FTC v. Amazon.com, Inc. (Prime membership)

Plaintiff's Opposition to Defendants' Motions to Dismiss Amended Complaint; Complaint for Permanent Injunction, Civil Penalties, Monetary Relief, and Other Equitable Relief

In its opposition to Amazon's motions to dismiss, the FTC described the "Iliad" cancellation flow as one in which consumers first had to locate an "End Membership" button that did not end membership. Source: Plaintiff's Opposition to Defendants' Motions to Dismiss Amended Complaint (Amazon.com, Inc.) The FTC argued that Amazon complicated online cancellation by making the starting point hard to find and falsely labeling it "End Membership," by forcing consumers to request cancellation four times, and by repeatedly offering links and buttons designed to derail them. Source: Plaintiff's Opposition to Defendants' Motions to Dismiss Amended Complaint (Amazon.com, Inc.)

Outcome. Count IV of the complaint alleges that Amazon's practices violate Section 4 of ROSCA, 15 U.S.C. § 8403(3). Source: Complaint for Permanent Injunction, Civil Penalties, Monetary Relief, and Other Equitable Relief (Amazon.com, Inc.) In opposing dismissal, the FTC argued that Amazon's motion must fail if it is plausible that Amazon's cancellation process was not simple. Source: Plaintiff's Opposition to Defendants' Motions to Dismiss Amended Complaint (Amazon.com, Inc.)

FTC v. Uber (Uber One subscription)

First Amended Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief

The first amended complaint alleges that Uber promised consumers they could cancel Uber One at "anytime," including "cancel anytime" with no additional fees. Source: First Amended Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Uber) Yet cancellation in the app allegedly took at least 7 screens and at least 12 different actions before a consumer could actually cancel. Source: First Amended Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Uber) The complaint characterizes the process as difficult, time-consuming, and far from simple. Source: First Amended Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Uber)

Outcome. The complaint alleges that the representation that consumers may cancel at any time with no additional fees was false, misleading, or not substantiated, and that making it was a deceptive act or practice under Section 5(a) of the FTC Act. Source: First Amended Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Uber)

Exposure

A ROSCA violation is treated as a violation of a rule promulgated under Section 18 of the FTC Act. Source: Amended Complaint for Permanent Injunction and Other Equitable Relief (quoting 15 U.S.C. §§ 8401, 8403, 8404; 16 C.F.R. § 310.2(u)) That is why civil penalties are available: the government's Amazon complaint cites Section 5(m)(1)(A) of the FTC Act as authorizing penalties of up to $50,120 for each violation of ROSCA. Source: Complaint for Permanent Injunction, Civil Penalties, Monetary Relief, and Other Equitable Relief (Amazon.com, Inc.) The Adobe complaint adds that the penalty authority reaches each violation committed with actual knowledge or knowledge fairly implied, and that each instance of noncompliance is a separate violation. Source: Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Adobe Inc.) (June 17, 2024) The same complaint asserts that the court may also order relief to redress consumer injury, including rescission or reformation of contracts, restitution, refund of monies paid, and disgorgement of ill-gotten monies. Source: Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (Adobe Inc.) (June 17, 2024)

The stipulated orders showed what resolution can cost. In the Vonage Holdings Corp. order, judgment of $100,000,000 was entered in favor of the Commission against the defendants, jointly and severally, as monetary relief. Source: FTC v. Vonage Holdings Corp., FTC Matter No. 2023165, Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief That order also required compliance notices for 12 years after entry. Source: FTC v. Vonage Holdings Corp., FTC Matter No. 2023165, Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief In the stipulated order in FTC v. Chegg, Inc., judgment of $7,500,000 was entered as monetary relief, and the defendant's counsel held that sum in escrow for payment within 7 days of entry of the order. Source: Stipulated Order, FTC v. Chegg, Inc.

FAQs

1.Statement of Chair Lina M. Khan. Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)
2.Statement of Chair Lina M. Khan. Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)
3.Statement of Chair Lina M. Khan. Statement of Chair Lina M. Khan Regarding the Notice of Proposed Rulemaking on the Negative Option Rule, Commission File No. P064202 (Mar. 22, 2023)