Spring Cleaning Your Subscription Practices: What to Toss Before Regulators Do

For subscription businesses in 2026, the compliance landscape is shifting fast and getting more complicated by the day. Federal and state regulators continue to focus on automatic renewal practices, even as the FTC’s rulemaking agenda evolves. Below is a practical snapshot of where things stand and what businesses should prioritize now.

The Current State of Play

The FTC’s final proposed Rule Concerning Recurring Subscriptions and Other Negative Option Plans (popularly known as “click to cancel”) was vacated by the Eighth Circuit in July 2025 on procedural grounds. Not to be deterred, the FTC subsequently issued a new Advance Notice of Proposed Rulemaking (ANPRM) seeking public comment on whether and how to resurrect and modernize the Rule. The ANPRM reopens several questions addressed by the prior rule, such as retention and “save” offers and the role of third-party service providers.

Despite the uncertainty around the FTC’s click to cancel rule, subscriptions remain a top enforcement priority. The FTC, State AGs and the class action bar have shown no signs of slowing down. 2026 has already seen a wave of FTC enforcement actions brought under the existing Restore Online Shoppers’ Confidence Act (ROSCA) as well as the passing of several new state laws with increasingly stringent requirements.

With federal rulemaking in flux and state laws continuing to multiply, businesses should focus on the core compliance objectives that apply across this patchwork of laws.

Disclosures

What Am I Supposed to Disclose?

In general, companies must disclose all material terms of the subscription program before a consumer provides their billing information and consents to the overall purchase. In nearly all states, material terms include:

1. That the consumer will be charged, whether those charges are recurring and any increases in cost after a trial period

2. That the consumer will be charged on a recurring basis unless they take steps in a timely manner to prevent such charges

3. Deadlines (by date or frequency) to avoid charges

4. The amount and frequency of charges

5. How to cancel

How Am I Supposed to Make These Disclosures?

The FTC and state automatic renewal laws require “clear and conspicuous” disclosure of all material terms prior to obtaining a consumer’s billing information in connection with a negative option feature. Disclosures must be virtually unavoidable before the consumer completes the transaction.

In practice, disclosures must stand out from any accompanying text or visual elements, whether by size, location, or length of time it appears. They should not be buried in dense text or combined with unrelated information that distracts from the subscription terms or interferes with the consumer’s ability to understand the disclosures.

Some states define the parameters of “clear and conspicuous” more specifically. California, Colorado, and Connecticut, for example, require disclosures of material terms to be highlighted through one of the following:

• Larger type than the surrounding text

• Contrasting type, font, or color to the surrounding text of the same size

• Set off from the surrounding text of the same size by symbols or other marks

Regulators are keenly focused on the sufficiency of automatic renewal disclosures. In January 2026, the FTC filed an action against online Q&A service JustAnswer, alleging that consumers believed they were making a low-cost “join fee” (between $1 and $5) when they were instead enrolled immediately in monthly plans costing between $28 and $125. Although the registration form did actually include a disclosure describing recurring charges, the FTC alleged the overall flow made it unlikely consumers understood they were agreeing to a subscription. According to the complaint, this prevented consumers from providing affirmative, informed consent to the automatic renewal terms or to the timing of the first subscription fee. This action reflects the FTC’s focus on the entire subscription journey, starting with the initial banner ad or even search advertising results.

State regulators are also active. In late 2025, a multistate settlement with online fashion retailer TFG Holding, which owns brands including JustFab, ShoeDazzle and FabKids, alleged that the company engaged in several deceptive pricing practices and inadequate automatic renewal disclosures. The settlement required TFG Holding to pay $1 million to participating jurisdictions to cover the costs of the investigation and $3.8 million in consumer restitution.

What Is Affirmative Consent and How Do I Obtain It?

Subscription terms must not only be disclosed. Consumers must also affirmatively agree to them. Importantly, this consent to the subscription terms cannot be bundled with an overall consent to purchase. Businesses must obtain consumers’ express informed consent to the negative option feature separately before collecting any payment or billing information.

The gold standard for affirmative consent continues to be an unchecked check box or similar mechanism that requires consumers to take a distinct, affirmative action to agree to the automatic renewal terms.

While the FTC does not currently require businesses to retain proof of each consumer’s affirmative consent, some states do. California, for example, requires businesses keep records evidencing affirmative consent for at least three years, adding the stipulation that businesses must keep these records for one year after the negative option contract is terminated, even if this period is longer than three years.

After enrollment, businesses must send consumers an acknowledgment in retainable form, such as an email. This acknowledgment must summarize the subscription terms and explain how to cancel. In some states, including California and Illinois, it should also include a link or clear electronic path to cancellation.

Do I Have to Send a Reminder Notice Before a Subscription Renews?

Most states require companies to issue a reminder notice in advance of a subscription program renewal, although the timing and format differ by state.

Minnesota requires businesses offering subscriptions of any length to send a written notice at least once per calendar year to all subscribers with the terms of service and instructions on how to cancel or manage the service.

As of last year, California requires a similar annual reminder, as well as additional notices of any fee changes or changes to other material terms of the negative option agreement.

Massachusetts enacted legislation in 2025 requiring businesses to provide advance written notice before each renewal of any subscription. For subscriptions with a period of more than 31 days, these notices must be provided between five and thirty days before renewal, and for subscriptions of 31 days or less, reminder notices must be sent as frequently as the consumer is charged – essentially requiring monthly notices for monthly plans.

Since the enaction of the Massachusetts law, other states have passed and/or enacted laws relating to the methodology of these renewal notices. New York now requires that all reminder and renewal notices be sent in the manner selected by the consumer. Connecticut’s law, which takes effect on July 1, 2026, requires that these notices be sent in the same manner in which the consumer activated the service or in the manner in which the consumer is most accustomed to interacting with a subscription company, whether by email (which also covers online activation), mail or telephone.

What If I Offer a Free Trial?

Free trial conversions are another seemingly simple but fraught business model. Many states require that the terms of the trial and conversion are clearly disclosed alongside the automatic renewal disclosures. On top of that, many states also require that businesses send additional reminder notices to consumers before a free trial converts to a paid subscription, and some states even require a second opt-in before the consumer is charged.

California requires businesses send reminder notices for free trials longer than 31 days, sent between three and twenty-one days before the trial ends. This reminder must provide consumers with a recap of the material terms and how to cancel before the billing deadline. Massachusetts now requires businesses to disclose, in the required post-enrollment acknowledgment sent to each consumer, the calendar date by which the consumer must cancel to avoid charges.

For free trials lasting one month or more, the District of Columbia requires that affirmative consent be obtained again at the end of the free trial period, regardless of whether the customer already consented at the time of free trial sign-up. Notice to the consumer of the free trial conversion with an option to opt out is not enough.

Cancellation

What Are the Requirements for Cancellation?

Both the FTC and virtually all states require that cancellation be as simple and easy as enrollment. Many also require that cancellation be achievable through the same channel used to sign up.

Symmetry is a good principle to apply. If consumers can enroll online, they should be able to cancel online without unnecessary hurdles.

Enforcement Trends

States are beginning to drill down. In California, the law expressly requires that cancellation be “immediate,” and offered exclusively online if the offer was accepted online (although “online” would permit a preformatted email cancellation mechanism as long as no other information or action is required of the consumer). Massachusetts has taken an even further step, requiring that the cancellation mechanism be available through the exact same app or website as sign up. And Minnesota now requires that any business with a website offering consumers profiles or accounts must also have a simple click to cancel option on that website, regardless of whether the consumer signed up for the subscription through the website.

In April 2026, New York City’s Mayor Mamdani together with the New York City Department of Consumer Protection proposed a municipal rule to strengthen New Yorkers’ “Click to Cancel” consumer rights, closely mirroring the federal proposal. If adopted, New York City would become the first municipality in the nation to enforce this level of consumer protection. The City had previously proposed an Executive Order, “Fighting Subscription Tricks and Traps,” showcasing the administration’s keen focus on this issue against the backdrop of the affordability crisis.

And not to hammer the point home, but the FTC is also closely scrutinizing cancellation flows. In one recent settlement, subscription-based education company Chegg paid $7.5 million  over allegations that that its cancellation process was confusing, difficult to navigate, and continued billing consumers after cancellation.

If I Let Customers Cancel Anytime, Am I in the Clear?

While advertising that consumers can cancel their subscriptions at any time may seem like a consumer-friendly approach to negative option programs, these two words are rarely accurate and can get you into hot water.

In December 2025, Instacart agreed to a $60 million settlement with the FTC over allegations that, among other deceptive practices, Instacart advertised that users could cancel their subscriptions to Instacart+ “anytime” after a free trial. However, in reality, consumers would only receive a refund if under narrow conditions. As such, the FTC found the term “cancel anytime” to be effectively illusory.

Can I Try to Save Customers from Cancelling with Special Deals?

When does a business cross the line from a genuine consumer retention effort to an impermissible “save attempt?”

Under the proposed FTC Rule, save attempts would have been entirely prohibited absent obtaining the consumers’ consent to receive one, which had the industry up in arms. While it’s to be determined whether that requirement will be resurrected, states are taking the lead on their own specific “save attempt” laws.

Under California law, companies may present consumers with save offers such as a discount or other retention benefit if consumers are clearly told they can complete the cancellation process at any time and if “a prominently located and continuously and proximately displayed direct link or button” allowing the consumer to cancel is simultaneously displayed. Symmetry matters here as well. Retention efforts should not obstruct or delay cancellation.

Some states prefer to align more closely to the initially proposed FTC Rule. In Minnesota, save attempts are expressly prohibited unless a consumer has already affirmatively and separately consented to receive them.

The Bottom Line

• Subscription “tricks and traps,” including insufficient disclosures and misleading upfront advertising, continue to be top of mind for both the FTC and state regulators.

• Subscription-based businesses should act now to fully audit all e-commerce practices, from initial offers to disclosures, consent mechanisms, cancellation and retention flows, and pricing practices. 

For more information about FTC requirements, state-specific laws or pending legislation, or general automatic renewal compliance questions, please contact the attorneys listed or the Davis+Gilbert attorney with whom you have regular contact.