The Federal Trade Commission (FTC) is on the verge of introducing significant changes to nationwide rules governing recurring subscription programs. After publishing a notice of proposed action last year, the FTC is now in the process of reviewing public comments, with the goal of finalizing the updated rule soon.
The new regulation is expected to set a high bar for subscription services, requiring clearer disclosure, simplified cancellation processes, and annual renewal reminders.
Once adopted, the rule will mandate that businesses provide in advertorials clear and conspicuous disclosure of the material terms of subscription agreements, implement a “double opt-out” option for consumers who wish to cancel, and ensure that the cancellation process is straightforward. An annual renewal reminder will also be compulsory to help consumers stay informed about their subscriptions.
This move by the FTC mirrors efforts by several states that have enacted or updated their own laws regulating recurring subscription programs. In 2023 alone, states like Connecticut, Florida, Georgia, Idaho, Illinois, Kentucky, North Dakota, and Virginia have taken steps to tighten subscription laws at the state level. These changes are part of a broader push to provide greater transparency and control to consumers over the services they pay for on a recurring basis.
At the same time, plaintiffs’ attorneys have ramped up lawsuits alleging violations of existing state-level subscription laws. As these cases increase, businesses offering subscription services face growing pressure to ensure compliance, not just with state regulations but also with the looming federal rule.
To minimize the risk of consumer class action lawsuits and regulatory investigations, brands are urged to take proactive measures. These include providing clear and prominent disclosure of subscription terms, obtaining express consumer consent before initiating subscriptions, and making the cancellation process as simple as possible.
With these changes on the horizon, brands offering recurring subscription services will need to adapt quickly to stay ahead of regulatory requirements and avoid legal pitfalls.