Negative Option Rule Updates: What Subscription Businesses Need to Know

Memberships, auto-ship programs, monthly treatment plans and free trials that turn into paid plans all have something in common: the customer keeps getting charged unless they act. Regulators call this a negative option, and the rules around it have changed several times in the last two years.

The short version: the FTC's 2024 "click-to-cancel" rule never took effect, a federal appeals court vacated it in July 2025, and the FTC started a new rulemaking in March 2026. None of that means subscriptions are unregulated. Federal law and state auto-renewal laws still apply, and the FTC keeps bringing cases.

A quick timeline

Date	What happened
1973	FTC adopts the original Negative Option Rule, which covers only prenotification plans like book and record clubs
December 2010	Congress passes the Restore Online Shoppers' Confidence Act (ROSCA), covering online negative option sales
October 16, 2024	FTC announces the amended "click-to-cancel" rule by a 3 to 2 vote
November 15, 2024	Amended rule published in the Federal Register
July 8, 2025	Eighth Circuit vacates the amended rule, days before most provisions were due to take effect
February 12, 2026	FTC restores the rule text to match the court decision
March 11, 2026	FTC announces an advance notice of proposed rulemaking (ANPRM)
April 13, 2026	Comment period on the ANPRM closes

What the 2024 click-to-cancel rule would have done

The amended rule was meant to cover nearly every negative option program in any medium, online, by phone or in person. According to the FTC's October 2024 announcement, it would have:

Barred misrepresentations of any material fact in negative option marketing
Required sellers to disclose material terms before collecting billing information
Required the customer's express informed consent to the negative option feature
Required a simple cancellation method that immediately stops charges, generally at least as easy as signing up

The final version dropped two items from the 2023 proposal: annual reminder notices, and a ban on pitching save offers during cancellation without first asking the customer.

Why the Eighth Circuit vacated it

Several industry groups challenged the rule. In Custom Communications, Inc. v. FTC, decided July 8, 2025, the Eighth Circuit set aside the entire rule on procedural grounds. The FTC Act requires a preliminary regulatory analysis when a rule is expected to have an annual economic effect of $100 million or more. The court found the FTC skipped that step and that the error was not harmless. The court did not rule on whether the substance of the rule was lawful.

The FTC formally restored the pre-2024 rule text in a February 12, 2026 Federal Register notice. That older rule still only covers prenotification plans, so most modern subscriptions fall outside it.

The 2026 restart

On March 11, 2026, the FTC announced an ANPRM asking whether and how to modernize the Negative Option Rule. It was published in the Federal Register on March 13, and comments were due April 13, 2026. The FTC said it has received more than 100,000 complaints about negative options and related practices over the past five years.

The notice asks broad questions rather than proposing text. Among the topics:

How long it takes consumers to sign up for and cancel subscriptions
How "save" offers work and what they cost or save consumers
Which parts of the vacated 2024 rule delivered measurable benefits
Current compliance costs under federal, state and local laws
Whether some industries or program types should be treated differently

The FTC listed three paths after reviewing comments: propose a rule, propose specific amendments, or take no further action. As of late October 2026, the FTC's rule page shows no proposed rule yet. An ANPRM is an early step, so any new rule would still need a proposal, another comment period and a final vote, and could be challenged again.

What still applies right now

ROSCA

For online sales, ROSCA has been the main federal subscription law since 2010. It makes it unlawful to charge a consumer through an online negative option feature unless the seller:

Clearly and conspicuously discloses all material terms before collecting billing information
Gets the consumer's express informed consent before charging their card or account
Provides simple mechanisms to stop recurring charges

Those three points overlap heavily with the vacated rule, which is why many lawyers told clients the vacatur changed less than headlines suggested.

Section 5 of the FTC Act

Section 5 prohibits unfair or deceptive acts or practices. It applies offline as well as online, so an in-clinic membership signed on paper or a tablet can still draw scrutiny if the terms are hidden or cancellation is a runaround.

Recent enforcement

Two cases show what the FTC is looking for:

Amazon (September 25, 2025). Amazon agreed to a $1 billion civil penalty and $1.5 billion in consumer refunds to settle FTC charges under the FTC Act and ROSCA over Prime enrollment and cancellation. The order requires a clear button to decline Prime, clear disclosure of cost, billing timing and renewal terms, and a cancellation method that uses the same channel the customer used to sign up.
Shutterstock (May 13, 2026). Shutterstock agreed to pay $35 million to settle FTC allegations that it marketed annual plans as monthly subscriptions, charged consumers without informed consent and placed cancellation fee details in fine print. It did not admit the allegations.

When a company violates an FTC rule or an order, civil penalties can apply per violation. The maximum is $53,088 per violation, the level set in January 2025. There was no 2026 inflation adjustment after the Office of Management and Budget cancelled it in April 2026, so the 2025 figure still applies.

State auto-renewal laws

States have their own rules, and some go further than federal law. California's Automatic Renewal Law was amended by AB 2863, effective July 1, 2025, for contracts entered into, amended or extended on or after that date. Key changes include:

Express affirmative consent to the auto-renewal terms, separate from consent to the rest of the agreement
Keeping consent records for at least three years, or one year after the contract ends, whichever is longer
An annual reminder for every subscription, stating the charge, frequency and how to cancel
Online cancellation for customers who signed up online, through a prominent link or button or a ready-made cancellation email
Save offers allowed only if a clear cancel option is shown alongside them
Notice of a price increase 7 to 30 days before it takes effect

Other states have their own auto-renewal statutes with different notice periods and definitions. Businesses selling nationally often build to the strictest standard they face.

Where this shows up in clinics and online brands

Negative options are common in businesses that do not think of themselves as subscription companies:

Med spa memberships billed monthly for injectables, facials or laser credits
Weight loss and wellness programs with recurring fees
Supplement and skincare auto-ship on an e-commerce store
Free consultations or trial months that convert to paid plans
Telehealth programs billed monthly with medication shipped on a schedule

The questions are the same in each case: did the customer clearly see the price, frequency and renewal terms before paying, did they actively agree, and can they stop it without a fight?

A practical review checklist

Businesses often walk through each signup path, online and in person, with these questions in mind:

Disclosure placement. Are price, billing frequency, renewal and trial end date shown near the payment button, not only in linked terms?
Separate consent. Is there a distinct, unchecked box or clear action agreeing to the recurring charge?
Consent records. Can you show when and how each customer agreed, and what they saw?
Trial conversions. Is the conversion date and first charge amount disclosed up front? Are reminder notices sent where state law requires them?
Cancellation path. Can someone who signed up online cancel online without calling? Do phone and front-desk staff process cancellations promptly?
Save offers. If you present a retention offer, is the cancel option still obvious on the same screen?
Price changes. Are customers told about increases in advance, with cancellation instructions?
Annual reminders. Do your email or SMS flows send renewal reminders where required?
Confirmation. Does every cancellation trigger a confirmation the customer can keep?

Because requirements vary by state and by channel, it is worth having counsel review membership agreements and checkout flows, especially before launching a new program or changing prices.

Where NutriCove fits

NutriCove builds e-commerce stores and the email and SMS flows that run alongside them, including order confirmations and renewal reminder sequences. If you are reworking a subscription checkout or setting up reminder emails your counsel has asked for, see how we build e-commerce stores and flows. We do not provide legal advice, so decisions about disclosure wording and state law should go through your attorney.

Sources

This article is general information, not legal or medical advice. Talk to a qualified attorney or licensed professional about your situation.