The FTC Has Raised the Bar for Subscription Marketing
On October 16, 2024, the Federal Trade Commission (FTC) announced the final version of its revised Negative Option or “Click to Cancel” Rule, which regulates negative option plans, including continuity programs, automatic subscription renewals, and free-to-pay conversions. However, its potential impact extends to the entire marketing chain—including lead generators, affiliate publishers, and agencies.
The rule officially took effect on January 14, 2025, and businesses have until May 14th to comply with most of the rule’s substantive requirements. If you play any role in driving traffic, collecting opt-ins, or promoting offers with auto-renewals or free trials, you are now part of the compliance equation.
Do Marketers Really Need to Worry About This Rule?
The short answer is yes. The FTC has consistently enforced rules against third-party marketers and affiliates, despite the fact that they rarely take any direct payments from consumers, based on campaigns that facilitate deceptive billing practices. Thus, even if you're not the one billing the customer, you can be held liable for violations if:
- Your campaigns misrepresent material facts concerning negative option programs
- Your lead forms fail to clearly and conspicuously disclose material terms
- Your traffic ends up in high-friction cancellation funnels
Bottom line: If you're promoting subscription-based services, you may share legal responsibility.
What Does the FTC Click to Cancel Rule Require?
The main requirements of the Negative Option Rule are summarized below:
- No Misrepresentations: The rule prohibits any material misrepresentation in connection with negative option marketing
- Clear Disclosures: Before obtaining billing information, companies must clearly disclose key terms, including the cost, frequency of charges, subscription length, trial periods, and cancellation methods.
- Informed Consent: Businesses must obtain express, informed consent from consumers before charging them for a negative option feature.
- Simple Cancellation: Businesses must provide a straightforward, easily accessible cancellation method, matching the ease of the original sign-up process. If a consumer signed up online, they must be able to cancel online without unnecessary hurdles, such as calling customer service or filling out additional forms.
The Rule Is Now Partially Enforceable—Here’s What That Means
On January 14, 2025, the FTC began enforcing the rule’s ban on material misrepresentations. Marketers running campaigns for subscription-based services using messages that do not match the reality of the program could face fines of up to $53,088 per violation.
The rule is facing significant legal challenges, with multiple lawsuits filed by industry groups, trade associations, and the U.S. Chamber of Commerce. These challenges argue that the FTC exceeded its authority in imposing the Click to Cancel rule, violated procedural requirements, and that the rule is arbitrary and capricious. All current legal challenges have been consolidated in the Eighth Circuit Court of Appeals.
Petitioners also requested a stay of the rule’s enforcement while litigation is pending, but as of this date the rule remains on track to take full effect on May 14th, unless a court issues a stay or overturns it.
Retention Offers Are Still Allowed—But Can’t Obstruct Cancellation
The FTC decided not to ban retention or “save” offers, but it made clear that these offers must be optional and must not interfere with cancellation. You can offer a discount or incentive, but only if it doesn't add friction or delay the user’s ability to cancel immediately.
If you have multiple upsells, pop-ups, or required surveys during cancellation—those could now be considered deceptive. To stay compliant, businesses should make it crystal clear that the customer can cancel at any time and must provide a clear and direct path to complete the cancellation without friction.
Consent Must Be Affirmative and Separate
Consent to recurring charges must be affirmative, clear, and separate from the rest of the transaction. No more pre-checked boxes, vague disclosures, or hidden terms.
If you're collecting leads, running landing pages, or managing SMS campaigns, this rule means offer language must be clear and unambiguous so that an ordinary consumer can understand it.
B2B Offers Are Not Exempt
The FTC has confirmed that the rule also applies to B2B subscription models. That includes SaaS tools, service retainers, and other recurring billing offers marketed to business customers. If you're in B2B lead gen, you need to ensure those offers are just as transparent and cancel-friendly as consumer-facing ones.
State-Level Rules Still Apply
It’s important to understand that the FTC’s “Click to Cancel” rule does not override stricter state laws. This means marketers and lead generators must ensure their campaigns comply not only with the federal standard, but also with any additional requirements set by individual states.
Since California’s law is considered among the strictest, adopting AB 2863’s standards early is the easiest and most effective way to ensure compliance across both federal and state lines. For marketers operating nationwide—or supporting clients that do—treating California’s approach as your baseline reduces risk and simplifies your legal obligations.
What You Should Be Doing Now
As of today—April 25, 2025—part of the rule is already enforceable, and full compliance kicks in soon. Here's what you should already have done—or complete before May 13, 2025:
- Audit your subscription offers and funnels. Make sure cancellation is quick, easy, and not buried behind distractions.
- Check your consent language. Ensure users are giving clear, separate agreement to recurring charges.
- Limit your save tactics. Keep retention efforts simple, optional, and non-obstructive.
- Document everything. Store opt-in records and campaign data for at least three years. This is key if you’re ever challenged by regulators or clients.
Need help staying ahead of the FTC Click to Cancel Rule?
Whether you're running lead gen campaigns, managing outbound traffic, or supporting clients with recurring billing models, we can help you audit funnels, clean up opt-ins, and align with the latest state and federal compliance rules.
👉 Schedule a free consultation with Blacklist Alliance today to protect your business, strengthen your marketing workflows, and ensure your campaigns are 100% compliant before enforcement ramps up.
