What the FTC’s New “Click to Cancel” Rule Means for Small Businesses

Ever tried to cancel a free trial only to get charged $97 because the cancellation link was buried under five clicks and a customer service call? That’s exactly the kind of frustration the FTC is targeting with it’s new Click to Cancel rule.

The Federal Trade Commission (FTC) has just changed the game because starting July 14, 2025, their new Click to Cancel rule officially takes effect, and if your business runs any kind of subscription, recurring payment, or auto-renewal model, youneed to be paying attention.

Here’s what this rule means, how it affects your business, and what steps you can take now to stay compliant (and keep those customer relationships squeaky clean). 

So, What Is the Click to Cancel Rule?

The FTC’s Click to Cancel update is part of their revised Negative Option Rule — AKA the rules that govern how businesses offer subscriptions, memberships, free trials, and other auto-renewing services. In short, they’re cracking down on shady cancellation practices and making sure consumers can easily cancel what they no longer want. 

Here’s the new standard (without the legalese):

• If you let customers sign up online, you have to let them cancel online (in a process just as simple as signing up).

• Disclosures about recurring charges must be clear, easy to find, and truthful.

• You need to get express consent before charging a customer.

• You must be able to prove they agreed to the terms.

• Violators can face civil penalties and be required to issue refunds. 

Why the Rule Was Created

We’ve all had an experience where we’ve attempted to cancel a recurring payment and had to jump through hoops to make it happen. And let’s be honest, canceling a subscription shouldn’t feel like solving a maze. 

The FTC is going after the kinds of shady tactics we all hate, like:

• Burying cancellation links behind six clicks and a login form.

• Charging people after free trials without clear notice. 

• Hiding billing terms in fine print.

• Making customers jump through hoops to cancel.

The FTC wants to make it clear that these tactics are a thing of the past. If your business is built on trust, then this rule is less of a burden and more of an opportunity to make your processes better and more transparent.

What The Click to Cancel Rule Means for Small Business Owners

If you sell digital products, memberships, coaching programs, software subscriptions, or anything that auto-renews, this applies to you. Specifically:

• You need a cancellation process that’s as simple as your sign-up flow.

• You should review and update your Terms & Conditions, checkout pages, and confirmation emails for clarity and compliance.

• You need records showing that a customer agreed to your terms before being charged.

• You must provide cancellation options that don’t require customers to call or email you manually (if they signed up online. 

And yes, this includes systems like Kajabi, Teachable, ThriveCart, and other popular checkout tools — if you’re using a platform that doesn’t support easy cancellation, it’s time to find one that does. 

How to Stay Compliant (Without Stressing Out)

Ready to get to work making sure your website and policies are in compliance? Here’s your Click to Cancel Compliance Checklist:

1. Audit Your Sign-Up and Checkout Flows: Make sure your recurring billing details are upfront and crystal clear.

2. Streamline Your Cancelation Process: Match the ease of sign-up with a cancellation flow that’s equally friction-free.

3. Update Your Contracts and Terms: This is a good time to review your templates and policies.(You can always grab one of oursfor an easy jump start!)

4. Document Customer Consent: Use tools that log acceptance of terms, like e-signatures, or checkboxes during checkout.

5. Train Your Team: If you have VAs or customer support help, they should know exactly how to handle cancellation requests.

The Contract Shop® has your back. Our Terms & Conditions and Website Policiesare designed with these changes in mind — so you can get legally legit and confidently compliant in one afternoon. 

⚠️As always, while our templates are lawyer-created, we’re not a law firm and can’t provide legal advice. For questions specific to your business or jurisdiction, contact a licensed attorney.