For years, auto-renewal was a gray area that companies exploited freely. Bury the renewal clause in the T&Cs, make cancellation require a phone call, and watch retention rates climb. That era is ending.
A combination of federal and state regulation is closing the loopholes — and companies that haven't updated their terms and processes are increasingly exposed.
The FTC Click-to-Cancel Rule (2024)
The Federal Trade Commission finalized rules in 2024 requiring that companies offer a simple cancellation mechanism — at minimum as easy as the signup process. For online subscriptions, this means online cancellation must be available. Phone-only cancellation for online subscriptions is now an FTC enforcement target.
The rule also requires: clear disclosure of auto-renewal terms before the consumer subscribes, a simple method to cancel that doesn't require the consumer to interact with a live agent, and immediate cancellation confirmation.
California's Automatic Renewal Law
California's ARL is one of the most comprehensive in the country. It requires:
- Clear and conspicuous disclosure of auto-renewal terms before the consumer agrees
- Affirmative consent to the auto-renewal offer (a pre-checked box doesn't count)
- Acknowledgment of the terms sent via email after signup
- A simple, cost-effective mechanism to cancel
California has aggressively enforced this law. Companies like Apple, Amazon, and various subscription apps have faced ARL-based litigation.
What "Clear and Conspicuous" Actually Means
This is where most companies get into trouble. Regulators and courts have increasingly rejected disclosures that are:
- Buried below the fold on a signup page
- In smaller font than surrounding text
- Presented in a color that reduces contrast with the background
- Placed after the call-to-action button
The trend in enforcement is clear: if a disclosure requires the consumer to actively search for it, it's not conspicuous.
The Business Case for Compliance
Beyond legal risk, there's a trust argument. Subscription companies with transparent renewal policies and easy cancellation paths consistently outperform on net promoter score and long-term retention. Customers who feel they can leave easily tend to stay longer than customers who feel trapped.
FairPrint's auto-renewal criterion checks for proactive disclosure, reminder notifications before renewal, and a clear cancellation path. Companies that pass this check are not only more legally protected — they're building a more sustainable subscription business.