The end of President Biden’s administration saw the Federal Trade Commission (“FTC”) adopt the sweeping “Click-to-Cancel” rule, which stands to impose a spate of requirements for disclosure, consent, and cancellation on any business in the country that uses a recurring billing model — whether in a B2B or B2C context. The FTC’s rule was challenged in court almost immediately, and that case remains pending before the United States Court of Appeals for the Eighth Circuit, with oral argument scheduled for June 10, 2025. Although the Eighth Circuit declined to stay the rule during the pendency of the appeal, the FTC itself — now minus the Democratic Commissioners who originally voted for the rule — announced on May 9, 2025, it would delay enforcement of the rule until July 14, 2025. Even then, the FTC said it would be open to potentially revising the rule based on the practicalities of enforcement, signaling a less antagonistic approach to business than the FTC exhibited when headed by Lina Khan.
But while the fate of the FTC’s Click-to-Cancel rule hangs in the balance before the Eighth Circuit, state legislatures have stepped in with their own spin on the Click-to-Cancel rule. California and New York are leading the charge, at least on the B2C front.
California
California already broadly prohibits unfair and deceptive trade practices, including with respect to recurring billing models. Those protections will expand effective July 1, 2025, when California’s Click-to-Cancel rule becomes effective via an amendment to Sections 17601 and 17602 of the Business and Professions Code. The newly enacted rule applies to all automatic renewal, continuous service, and free trial contracts entered into, amended, or extended after that date, but it has one key difference from the FTC’s Click-to-Cancel Rule: while the FTC’s rule applies to B2B and B2C transactions alike, California’s rule applies only to B2C transactions. Specifically, it regulates offers made to “consumers” within California, with a “consumer” defined as an “individual” who is acquiring goods, services, or credit for personal, family, or household purposes.
Like the FTC’s rule, California’s rule can be broken down into three categories of regulation: disclosure, consent, and cancellation.
California Disclosure Requirements
California requires businesses to present the terms of an offer for automatic renewal or continuous service clearly, conspicuously, and proximately to the request for the consumer’s consent to the offer.
California’s new law lists exactly what must be disclosed to a consumer before billing information is confirmed: (1) that automatic renewal will occur absent affirmative action to cancel; (2) the length and any additional terms of the renewal period; (3) costs to be charged; (4) methods of cancellation, including a link directing the consumer to the cancellation process if the transaction is electronic; and (5) contact information for the business. If the offer includes a free gift or trial, the offer must clearly disclose the price that will be charged when the trial ends.
California then layers in additional obligations for electronic offers of free gift or trial periods that last for more than 31 days, and where the seller collected contact information for the consumer. For such offers, the seller must again provide the consumer with the notice described above between three and 21 days before the expiration of the promotional period. Conversely, if the initial term of the offer was for a period of a year or longer, then the consumer must be given notice between 15 and 45 days before the renewal occurs. For customers under an annual automatic renewal or continuous service agreement, reminders must be sent each year prior to renewal.
California’s Consent Requirements
For any recurring billing offer, the seller must capture the consumer’s affirmative consent to the offer and maintain it for the longer of three years or one year after the contract ends. California law also requires that the disclosures described above be provided in a format the consumer can retain.
California’s Cancellation Requirements
California’s rule requires that sellers of recurring billing offers provide a toll-free phone number, email address, postal address, or another cost-effective, timely, and easy-to-use mechanism for cancellation that matches the means of sign-up. The cancellation method must be disclosed at sign up. Any phone number must be answered promptly, with voicemails returned within one business day. If a customer signs up online, then the seller must either provide a prominent cancellation link within the customer account profile or device/user settings, or pre-written cancellation email that the consumer can send to the business without any additional information (although a business may require the consumer to verify the account before canceling).
New York
New York’s version of the Click-to-Cancel rule is still making its way through the legislature and has not yet been passed into law. That said, it seems likely to cross that transom. If enacted, New York’s Click-to-Cancel rule would appear in Section 527-a of the General Business Laws and would take effect 180 days after becoming law. As in California, the rule would apply to automatic renewals, continuous service offerings, and free gift/trial offers made to consumers — i.e., individuals acquiring goods, services, or credit for personal, family, or household use.
New York’s Disclosure Requirements
In a familiar pattern, New York’s Click-to-Cancel rule would require businesses to provide notice to consumers that includes the terms of the offer, the cancellation policy, and information about how to cancel in a clear and conspicuous manner, able to be retained by the consumer. In a notable departure from both California law and the FTC’s rule, however, New York’s law neither specifies the terms of the offer that must be disclosed, nor requires that the disclosure be adjacent to the consumer’s consent and occur before information is collected.
Like California, New York’s rule also includes special requirements for offers with a free-gift or trial period that lasts more than 31 days. In those cases, the business must remind the consumer between 3 and 21 days before the renewal occurs, with instructions on how to cancel. Conversely, if a consumer accepted an initial term of one year, and there is a renewal term that lasts more than 31 days, then the consumer must receive instructions on how to cancel between 15 and 45 days before the cancellation deadline.
New York’s Cancellation Requirements
In line with California and the FTC’s rules, New York would require that a consumer who signed up online be allowed to cancel online as well, recognizing that the business may provide a pre-written termination email that the consumer can send the business without further information. New York also requires parity between the means of sign-up and the method of cancellation. For those who accepted an offer over the phone, the business must prominently display a toll-free phone number for cancellation.
New York’s Consent Requirements
In the biggest departure from the FTC and California’s respective Click-to-Cancel regimes, New York does not require that affirmative evidence of consumer consent be collected and retained by the business for a certain period of time.
Summing It Up
If the FTC’s Click-to-Cancel rule survives the challenge in court, it will have the most sweeping scope as it applies to both B2B and B2C transactions. Regardless of its fate, however, California consumers will be entitled to protection under its Click-to-Cancel rule as of July 1, 2025, and New Yorkers may be soon to follow as its law progresses through the legislative process.
