Comprehensive Compliance Guide - Federal and State Subscription Cancellation Laws
Easy cancellation is the law. Is your business ready? We’ve got you covered in this comprehensive guide to state and federal regulations.
It’s been a big year for automatic renewal laws. The FTC’s negative option rule shook things up in October, California’s “click to cancel” law made headlines in September, and numerous other states passed or amended their own such legislation.
Effective in early 2025, the FTC rule brings nationwide uniformity to subscription cancellation regulations, making many state-based regulations redundant and compliance less confusing for businesses. However, some jurisdictions (notably California) do have requirements that go above and beyond the federal guidelines.
This post will help you navigate the details of state and national subscription cancellation requirements.
Disclaimer: The guidance provided herein is for informational and educational purposes only and does not constitute legal advice. Please consult a legal/compliance representative when implementing subscription compliance policies and practices.
End compliance confusion. Get one-on-one guidance from our cancellation experts. It’s free.
Overview
In the United States, the FTC’s negative option rule and many state laws aim to make canceling subscription billing easier for consumers.
Background
Beginning with the federal Restore Online Shopper’s Confidence Act (ROSCA) in 2009 and California’s automatic renewal law (ARL) in 2010, regulators have taken increasing interest in automatic renewals (also called “evergreen” contracts).
In October 2024, the FTC finalized significant changes aiming to update, consolidate and clarify the existing patchwork of nationwide automatic renewal regulations. Nicknamed “click to cancel,” the updated rule requires businesses to make canceling a subscription as easy as it is to sign up, and allow cancellation in the “same medium” used to sign up.
Also in 2024, California and other states—Minnesota, South Carolina, Tennessee, Utah and Virginia—passed bills to introduce or amend automatic renewal regulations.
Today more than half of U.S. states have some form of automatic renewal law in place, and if your business offers subscription billing to consumers in those states, the regulations apply to you.
Like the federal rule, state-based automatic renewal laws (ARLs), though each unique, usually include provisions regarding clear disclosures, informed consent and easy cancellation procedures. Here we focus on cancellation.
Scope
While state laws tend to be more limited in scope, the FTC’s negative option rule (2024) is quite broad. It applies to all subscriptions, free trials, etc in all media, including internet, mobile application, text/SMS, email, telephone, print and in-person. Businesses that were previously exempted from the older rule are subject to the final rule.
Whereas federal requirements apply nationwide, state ARLs only regulate contracts made with consumers in the respective states. Furthermore, federal regulations apply equally to B2C and B2B subscriptions, whereas state laws typically apply only to B2C agreements.
Simple cancellation mechanisms
Under federal and state law, businesses must provide easy cancellation options. What’s “easy”?
The FTC’s negative option rule requires businesses to provide a “simple mechanism” for cancellation which is “at least as easy” as consenting to the subscription.
Many state ARLs (California, Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois, Kentucky, New York, North Dakota, Oregon, Tennessee, Vermont and Virginia) require a “cost-effective, timely, and easy-to-use” cancellation option.
While compliant cancellation options can include phone and even postal mail under some conditions, for most businesses today (particularly SaaS, digital media and ecommerce) an online cancellation option is mandatory. Which is our next topic.
Mandatory online cancellation
The days are over for taking signups online and cancellations by phone.
The FTC’s negative option rule requires that businesses allow cancellation in the “same medium” used to sign up for a subscription, and some state ARLs (Delaware, Georgia, New York, Tennessee) more explicitly require online cancellation for online signups. Notably, regardless of signup method, California requires online cancellation if the customer is accustomed to interacting with the business online.
The bottom line: if you allow signups online, you must allow online cancellation as an option.
The good news: easy, online cancellation is great for consumers and business. Contrary to conventional thinking, a self-service cancellation flow can actually improve customer retention over phone-based interventions.
Consider the case of the Minnesota Star Tribune. When introducing online cancellation, they worried it might harm customer retention. But with ProsperStack Retain’s powerful A/B testing features, the paper optimized their cancellation process and obtained an online save rate of 18.5%. That’s 10% higher than their call center.
“ProsperStack is one of the most important and impactful things we’ve implemented in several years,” the Star Tribune’s head of retention remarked. See the case study.
Online cancellation requirements
As we’ve seen, most businesses are required by state and federal law to provide easy, online cancellation for subscriptions.
What makes for easy cancellation? The federal requirements stipulate that businesses must provide a “simple mechanism” for cancellation which is “at least as easy” as consenting to the subscription.
Additional requirements:
The simple cancellation mechanism must be “easy to find” (FTC)
Interacting with a live or virtual representative is not allowed if such an interaction was not required to consent to the subscription (FTC)
Online cancellation must be “exclusively” online (California, Kentucky, New York, Tennessee)
A few states have unique regulations, summarized below.
California
California’s automatic renewal law (Cal. Bus. & Prof. Code § 17600) is one of the strictest in the country. It stipulates that online cancellation mechanisms allow consumers to cancel “immediately” and “exclusively” online.
By “immediately,” the law does not prohibit requiring the user to login to access the cancellation option, although an offline option must be provided.
The law also stipulates that consumers be allowed to cancel “at will,” without the business “engaging any further steps that obstruct or delay” cancellation.
California’s 2024 “click to cancel” amendment clarifies that a business’s online cancellation process may include steps to present incentives to stay or provide information about the effects of cancellation, provided it includes a “prominently,” “continuously” and “proximately” displayed “click to cancel” (or similarly worded) link or button that processes the cancellation without further delay.
The amendment applies to contracts “entered into, amended, or extended” on or after July 1, 2025.
Subscription regulations are constantly in flux. Subscribe to stay up-to-date on the latest compliance developments, churn-prevention strategies and more.
Colorado
Colorado’s automatic renewal law (Colo. Rev. Stat. § 6-1-732) requires businesses to offer “a simple, cost-effective, timely, easy-to-use, and readily accessible” cancellation mechanism, either a “one-step online cancellation link” or in-person at a location where the consumer regularly uses the subscription goods/services.
The online link must be available “immediately” or after a “reasonable” authentication process solely to confirm the consumer is authorized to make changes to the account.
The law applies to automatic renewal contracts executed on or after January 1, 2022.
Idaho
Idaho Code § 48-603G applies only to Internet-based agreements. For these online subscriptions, businesses must offer “free” online cancellation in the “same manner” as used to subscribe. If a phone number is provided, it must be toll-free and prominently displayed in the subscription disclosures.
Minnesota
Minnesota law (Minn. Stat. § 325G.58) prohibits businesses from making offers of additional benefits, gifts, contract modifications or the like upon “notice of cancellation” by the consumer. After cancellation, businesses may ask once for permission to present such offers to the consumer.
The statute makes clear that businesses are allowed to:
Ask for cancellation feedback, but not require it
Inform the consumer of consequences of cancellation
Verify the consumer’s identity
Present alternatives to keep the account alive, such as downgrading, pausing or suspending the subscription
Telephone and other cancellation options
Besides web and app-based options, cancellation can be facilitated via:
Email - California, Georgia, Idaho, Illinois, Kentucky, New York and Tennessee specify that, when offering cancellation by email, businesses must provide a pre-formatted email message that a consumer can send without additional information.
Phone - While cancellation by telephone is allowed, in most cases it can’t be the only cancellation option. The FTC rule states that, when offering cancellation via phone, businesses must make available a number to answer or record messages during normal business hours, and must promptly process all cancellations received. The call must not be “more costly” than the call used to consent to the subscription. Maine and Idaho require the number be toll-free and “prominently” displayed in the automatic renewal disclosures during signup. California has additional requirements (see below).
Postal mail - The federal rule doesn’t mention this option, but many state ARLs allow post mail if the seller directly bills the consumer. New Jersey requires, “at minimum,” that businesses provide (a) an online method and a mailing address or (b) a telephone number.
In-person - The FTC rule states that if consent was obtained in-person, businesses should offer (where practical) an option to cancel in-person, and must offer a simple cancellation mechanism online or via telephone.
Telephone cancellation in California
California law requires that businesses, when offering cancellation via phone, must answer calls “promptly during business hours” and not “obstruct or delay” a customer’s cancellation.
The business may present the customer with an incentive to stay or information about the effects of cancellation, but only the consumer has been informed that they may complete cancellation at any time by simply stating their intent to cancel, and the business shall promptly process the cancellation without obstruction or delay.
If the customer left a voicemail, the business must process the cancellation or return the call within one business day.
How ProsperStack can help
With state and federal laws coming into effect, providing simple online cancellation is not just a best practice—it’s the law. ProsperStack can help you stay compliant while optimizing retention.
End compliance confusion. Get one-on-one guidance from our cancellation experts. It’s free.
Trusted by brands like Nutrafol, Nestle and Hootsuite, ProsperStack Retain is churn-busting cancellation flow software with robust reporting, A/B testing and AI offer optimization. And because we integrate with your subscription billing platform, you can be up and running in days, not months.
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