Keep your SaaS Cancellation Flow Compliant 2025: Guide to FTC Click To Cancel and ARL

Subscription billing and automatic renewals have never been under more scrutiny: In 2024, the Federal Trade Commission (FTC) finalized key “click to cancel” updates to its negative option rule and states are rapidly introducing their own regulations. California has been the most active, with additional amendments coming on July 1, 2025. In this blog I will go through an overview of the regulation, and then the takeaways for subscription SaaS companies.

Understanding the rapidly evolving cancellation regulation can be confusing for businesses, but it could potentially result in unexpected compliance fines. This problem can easily be solved by using out of the box cancellation flow tooling on the market, like ChurnKey or Relixir.

The Federal “Click to Cancel” Rule

The FTC’s updated negative option rule (sometimes called “click to cancel”) just came out early last year aimed at making it as easy for consumers to cancel a subscription as it was to sign up. Here are the core points:

1. Same Medium Requirement: If someone subscribes via a website, they must be able to cancel in a similarly straightforward manner online. If they signed up over the phone, there should be an equally easy cancellation option by phone

2. Simple and Transparent Flow: The rule demands a “simple mechanism” for cancellations. So no more multi-step processes or mandatory phone calls after an online sign-up.

State-by-State Differences

Even with the uniformity the FTC rule brings, certain states still have automated renewal law (ARL) provisions that go above and beyond federal requirements. A lot of states are following the same regulatory path as California, which also has the tightest regulation right now.

California

• Strict Online Cancellation: If a customer signed up online or typically manages their account online, you must provide a clear online cancellation option.

• Immediate & Exclusive Flow: The cancellation link or button must be easily visible and must process cancellations “immediately,” without requiring extra steps.

• Retention Offers: Allowed, but you must provide a clearly labeled, always-available “cancel now” link or button that processes the cancellation if the consumer declines the offer.

New York

• Clear Disclosure: Terms of the subscription renewal (including how to cancel) must be clearly presented before sign-up.

• Posting & Notice: If your sign-up is purely online, New York expects you to provide easy, direct online cancellation without requiring a phone call.

• Prompt Processing: All received cancellations (web or phone) must be executed quickly without imposing hidden fees or retention blocks.

Minnesota

• Limited Retention Offers: Limits the presentation of retention offers once the consumer states intent to cancel. Only after the cancellation is complete, businesses may make a single request for permission to present retention offers.

Practical Takeaways for your SaaS Cancellations

• Offer Multichannel Cancellation: If you collect signups online, you must at least offer cancellation online. Phone and postal mail may be acceptable add-ons (and sometimes legally required),

• Keep it Simple and Accessible: Both the FTC and states like California insist that the cancellation flow be frictionless. Avoid burying the “cancel” button or slowing down users during cancellations

• Ensure Retention is Done Compliently: Presenting an incentive or discount to keep a subscriber isn’t prohibited, but it must not block or delay the actual cancellation. Make sure users can easily bypass or refuse the offer if they’re set on canceling.

  

Ensure Compliance Easily: Introducing Relixir

Making sure your subscription business complies while extracting the most insight is difficult. That’s why we created Relixir, an AI-native cancellation flow tool that provides:

• Automated Compliance: Relixir is constantly being updated to be compliant with new regulations so you don’t have to worry about it. 

• Cancellation Deflections: Stop people from cancelling with dynamic retention offers.

• Automated Interviews: Using LLMs and AI voice agents, we can automate a human-like conversation to replace your exit survey. This brings a new dimensions to your feedback

• Personalized Reactivations: Win-back past users by targeting at the right time and the right message based on the feedback they gave.

Ready to make your cancellation flow compliant and turn it into a powerful retention engine? Book a Demo