New York City has put into effect a so-called "Click to Cancel" rule requiring companies to let consumers cancel subscriptions as easily as they sign up for them. It is the first time a local government in the United States has mandated such a requirement. "If a company can take your money with one click, you should be able to cancel with one click," Mayor Zohran Mamdani said.
Starting on the 1st, businesses selling subscriptions on an automatic-renewal or continuous-service basis must allow consumers to cancel through the same method they used to sign up, according to CNBC and the city.
Companies may not require consumers who signed up online to make a phone call or visit a store in person to cancel.
The city also takes issue with practices that switch consumers from a free trial to a paid subscription without their knowledge, and with cancellation processes that add unnecessary steps. Businesses must clearly disclose key terms, including the subscription period and whether it renews automatically, and must inform consumers of their rights when they sign up and when they cancel.
Companies that violate the rule must compensate affected consumers and may face civil penalties starting at $525 (about 710,000 won) per violation. The city estimates the rule will save consumers between $21.5 million and $162.5 million (about 29.3 billion to 220.8 billion won) a year.
Subscription services commonly use a "negative option" structure, under which contracts renew automatically unless the consumer cancels. A survey by the U.S. technology outlet CNET found that American adults spend an average of $1,080 a year on subscriptions, including $205 on services they no longer use. Consumer complaints about subscription cancellations filed with the U.S. Federal Trade Commission rose to about 70 a day in 2024 from an average of 42 a day in 2021.
There is currently no federal rule in place. The FTC finalized a nationwide "Click to Cancel" rule in October 2024 under the administration of Joe Biden, but a federal court struck it down in July last year, just before it was to take effect, citing procedural flaws.
