Take a quick breath—but just a short one—because late Friday, the Federal Trade Commission (FTC) decided (3-0) to push the compliance date of its Negative Option (or "Click to Cancel") Rule, a regulation designed to make canceling subscriptions as easy as signing up for them. Originally set to take effect on May 14, 2025, the compliance deadline has now been pushed back 60 days to July 14, 2025.

Why the delay?

The FTC's Negative Option Rule targets businesses that use subscription models, ensuring they provide clear disclosures, obtain informed consent and make cancellation straightforward. However, after reassessing the complexity of compliance, the Commission determined that the original deferral period did not sufficiently account for the challenges businesses may face in adapting to the new requirements.

What does the rule do?

The rule prevents companies from making cancellation harder than sign-up. If a consumer subscribes online, they must be able to cancel online—no jumping through hoops with phone calls or customer service chats. Additionally, businesses must provide clear information about cancellation before collecting payment details.

Industry impact

Subscription-based businesses, including streaming services, gyms and e-commerce platforms, will need to ensure their cancellation processes align with the new standards. While the delay gives companies more time to comply, the FTC has made it clear that enforcement will begin July 14, 2025. There has been industry speculation around whether the FTC would enforce this rule, but their Friday statement makes clear that we should expect to see scrutiny of auto-renewing subscription practices.

Looking ahead

The FTC has signaled openness to amending the rule if enforcement reveals unforeseen issues. This flexibility suggests that while the regulation is firm, it is not set in stone. Businesses should take this extra time to refine their compliance strategies and avoid potential penalties.