POV: you sign up for a free trial or a subscription that you’re super interested in. After a few weeks, you decide it’s not for you and you want to cancel.
That’s when you realize that you… can’t.
Next thing you know your card is being charged (without being reminded!) and finding a cancel button is next to impossible.
So you’re forced to call or email or send a messenger pigeon to get out of this mess.
HOW. ANNOYING. 🙄
This is something that I see happening wayyyy too often in the online business world and it’s unfortunately a marketing tactic.
It’s the “if we make it hard enough to cancel, they won’t” way of doing things or the “if we can just get them on the phone, we can offer a coupon code or extend their free trial in order to keep them” game and as much as I want to say that I understand the strategy, as a consumer this is simply not the vibe.
If you REALLY want to build the trust of your audience and keep your customers potentially coming back, you need to make things easy for them – even canceling their subscription or trial.
In the past, there was no real rule saying that business owners couldn’t do this… but NOW there is!
As of October 2024, the Federal Trade Commission (FTC) has implemented a “Click-to-Cancel” rule and if you run any sort of membership or subscription in your business, it’s time to pay attention!
In this blog post, I’m breaking down what this rule is, why it matters, and most importantly, how to stay in compliance.
What is the “Click-to-Cancel” Rule?
Gone are the days of being able to make your customers jump through endless hoops to cancel the subscription or free trial that they signed up for!
With the new Click-to-Cancel rule, businesses with subscription or membership services, including services with automatic renewals or free trials, are required to provide a clear, straightforward cancellation option.
More often than not, you’ll find that there’s no way for you to cancel something without contacting a customer service representative and the FTC has said NO MORE! If you can sign up for a service on your own, then you should be able to cancel on your own.
For a more in depth breakdown of this new rule, click here!
Why The Click-to-Cancel Rule Matters
While this rule might seem like just another thing that the FTC is after you for, it actually can benefit you as a business owner in various ways.
By making your subscription or membership easy to cancel, you’re simultaneously building trust with your audience which can actually increase the likelihood of them wanting to work with or buy from you in the future!
Additionally, the rule helps businesses avoid potential customer dissatisfaction and complaints related to hard-to-cancel subscriptions and fewer complaints can result in better customer retention and lower the risk of negative reviews, which could potentially damage your public image.
While some may worry that easier cancellation could lead to more subscription terminations, the opposite can actually happen. Offering straightforward cancellation options signals integrity, which can lead customers to re-subscribe in the future.
Overall, customers appreciate when they don't feel trapped, making them more likely to return after taking a break from a service.
How To Stay In Compliance
Now that you know what the “Click-to-Cancel” rule is and why it really matters, let’s get to the most important part – HOW to stay in compliance!
Make Your Subscription Terms Clear and Conspicuous
You can’t hide the important details in fine print anymore. Your renewal and cancellation terms need to be clear and easy to see before your customer clicks that “Buy” button. Think of it as giving them a heads-up right upfront.
Get Clear, Informed Consent with Clickwrap
Before you charge a customer, you’ve got to get their explicit consent. No more pre-checked boxes or sneaky sign-ups. The best way to do this is to add a clickwrap agreement at checkout that requires them to check a box saying they agree to your Terms and Conditions. This keeps things transparent and keeps you protected.
Notify Customers Before Free Trials or Promo Periods End
This one’s huge – if someone’s on a free trial or a promo plan, you need to send a notification before they’re charged. This heads-up gives them a chance to decide if they want to continue, rather than hitting them with an unexpected charge.
Make Cancellation Easy
Cancelling should be as simple as signing up. If it took two clicks to join, it should take two clicks to leave. No hoops, no hidden steps, no extra charges. Implement a clear “Cancel Subscription” button to keep things easy and compliant.
Contracts To Help You Reflect These Changes
With these new rules in play, you’ll need updated contracts to cover your bases, especially Membership Terms and Conditions and Terms of Purchase for Digital Products.
The good news is that The Boutique Lawyer Contract Shop has got you covered!
➡️Membership Terms and Conditions – protect your memberships and make sure your cancellation terms are crystal clear.
➡️Terms of Purchase for Digital Products – essential for subscriptions and renewals, keeping you compliant with FTC rules.
➡️Website Protection Bundle: Privacy Policy and Website Terms of Use – the basics for running a legally protected online business.
P.S. Want to make sure that you never miss out on FTC updates? The Legalzine is the place to be!
It’s a monthly digital magazine designed to make legal compliance accessible, actionable, and fun for online entrepreneurs, coaches, and creative business owners.
CLICK HERE for all the details and subscription options (and if you decide it’s not for you, you can bet that cancellation is easy 😉)