Businesses operating in New York City will soon face stiff penalties for complex cancellation policies for automatically renewing subscriptions. Starting October 1, 2026, New York City will join a list of nearly a dozen states who have adopted laws designed to make it easier for consumers to cancel subscriptions. But this is also a nationwide issue; the Federal Trade Commission (FTC) is policing complicated cancellation policies by enforcing the Restore Online Shoppers’ Confidence Act (ROSCA). 

New York City’s Click-to-Cancel Rule brings new limits on automatic renewals

New York City’s upcoming Click-to-Cancel Rule will become one of the strictest in the nation. Under this new rule, a business offering an automatic renewal service must: 

• Share Material Terms. Inform the consumer of the material terms for any automatic renewal (e.g., the costs and deadline to cancel) before the consumer signs up or the business requests billing information.
• Deploy Simple Cancelation Process. Provide the consumer with the option to cancel at any time using a simple cancellation mechanism that is as easy to use as the way the consumer sign up for the subscription. For example, if a consumer can click an online button to sign up for the automatic renewal service, the consumer must be able to cancel with a click of a button.
• Act Reasonably. Avoid unreasonably burdening or delaying cancellation requests (e.g., do not misrepresent consequences or hang up on consumers trying to cancel). 
• Give Advance Notice. If the consumer is charged for an initial term of at least one year and the reoccurring charges occur in six-month increments, the business must inform the consumer of upcoming automatic renewals within 15 days (but not more than 45 days) before the cancellation deadline.

While there is no private right of action, consumers can make complaints to the Department of Consumer and Worker Protection who can bring claims under this rule. Businesses that violate the rule face paying (1) restitution for consumers in the amount charged for the automatic renewal offer after the consumer’s first cancellation attempt and (2) civil penalties of $525 for the first violation, $1,050 for the second violation, and $3,500 for each additional violation. And those penalties accrue per person, so the damages quickly add up for businesses.

States are embracing restrictions on complicated cancellation policies

New York City joins many other jurisdictions with similar provisions governing cancellations of automatic renewal services. California’s Automatic Renewal Law most closely aligns to New York City’s Click-To-Cancel Rule by requiring that consumers be given the ability to cancel using the same method they used to subscribe. Colorado’s Automatic Renewal Law requires that a business provides an online cancellation method that allows a consumer to immediately terminate a renewal. Other states, including Delaware, Idaho, Illinois, Minnesota, New York, Tennessee, Utah, and Virginia, have laws in place that ensure that a consumer can cancel as easily as signing up and can cancel online if the consumer either signs up or interacts with the business online. Lastly, while Georgia’s Automatic Renewal Law also requires that businesses provide an online option for cancellation, it also requires that businesses provide a draft email the consumer can send to cancel.

FTC is policing complicated cancellation practices

FTC does not have a click-to-cancel rule—despite an attempt—but has secured billions (with a “b”) in ROSCA settlements based on businesses’ cancellation practices. ROSCA requires online sellers to (1) get consent before charging consumers for an automatic renewal and (2) provide consumers simple mechanisms to stop recurring charges. Wielding that law, FTC has settled with several major businesses for problematic practices involving appropriate disclosures, deceptive signup practices, convoluted cancelation processes, and related issues. Businesses should review their cancellation workflow.

With this heightened focus across all layers of government, businesses should revisit their cancellation policies and automatic-renewal practices. The risk is especially great for those with online subscription offerings. A few practical compliance tips: 

• Check for Dark Patterns. Do you use a design choice (such as unnecessary friction or confusing language) that makes it difficult for a consumer to cancel?
• Ensure Timely Notice. Do you give enough advance notice of the renewal?
• Test Cancellation Journey. Does it take more steps to cancel than to sign up?
• Audit Enrollment Disclosures. Do you give the consumer the necessary details?
• Inventory Subscription Offerings. Do you offer subscriptions and renewals in a jurisdiction with a law governing automatic renewals?

If you have questions or need someone to help to ensure your automatic renewal services are in compliance with the applicable laws, we are ready to assist.