The Federal Trade Commission (FTC) is poised to introduce stricter nationwide rules governing recurring subscription programs, a move that could bring significant changes to how companies handle subscription services. In 2023, the FTC issued a Notice of Proposed Rulemaking to expand its existing rule, with public comments currently under review. Once finalized, the updated rule will likely set new standards requiring clearer disclosure of subscription terms, a double opt-in process for sign-ups, easy cancellation options, and annual renewal reminders.
These upcoming federal standards mirror similar regulations already enacted in several states. In 2023, new or updated laws targeting recurring subscriptions were passed in states such as Connecticut, Florida, Georgia, Idaho, Illinois, Kentucky, North Dakota, and Virginia. Companies found in violation of these laws have faced class action lawsuits, making compliance with both state and upcoming federal standards, as well as adherence to advertorial guidelines, increasingly crucial.
To avoid legal challenges and regulatory scrutiny, brands offering recurring subscriptions should take immediate steps to comply with these evolving standards. Key actions include providing clear and conspicuous disclosure of subscription terms, obtaining explicit consumer consent (and preparing for the FTC’s likely double opt-in requirement), offering simple cancellation methods, and sending reminder notices before free trials or paid subscriptions renew.
As the FTC finalizes its rule and states continue to adjust their laws, businesses need to stay vigilant, updating their subscription practices to protect themselves from potential lawsuits and regulatory penalties.
