Rule Concerning the Use of Prenotification Negative Option Plans
The Federal Trade Commission ("FTC" or "Commission") seeks public comment on the need for amendments to the Commission's "Rule Concerning the Use of Prenotification Negative Option Plans" (i.e., "Negative Option Rule" or "Rule") to help consumers avoid recurring payments for products and services they did not intend to order and to allow them to cancel such payments without unwarranted obstacles.
What this rule actually says
The FTC wants to make it easier for customers to cancel recurring charges. Right now, companies can make subscriptions hard to quit—buried cancel buttons, phone-call-only policies, that sort of thing. This rule would require clearer signup disclosures, easier cancellation methods, and faster processing of cancellation requests.
Who it applies to
- If you charge customers on a recurring/subscription basis (monthly AI assistant access, per-API-call billing with auto-renewal, annual licenses that auto-renew): this applies.
- If you operate in the US: this applies. State-level variations may exist but FTC rules generally cover all 50 states.
- If you do NOT charge recurring fees (one-time purchase, per-use metering without auto-renewal): this likely does not apply.
- AI use cases that trigger it: medical scribes with monthly subscriptions, hiring assistants sold as "per-employee-per-month" plans, support chatbots with auto-renewing seats. Mostly SaaS models.
- What's out of scope: the rule covers billing practices, not the AI system itself, data handling, or bias—those are separate regulatory questions.
What founders need to do
- Audit your current signup and cancellation flow (2–3 days). Document how customers sign up, what disclosures they see, and how they cancel. Note: if you already have a one-click cancel button and clear terms, you're probably fine.
- Review your terms of service and pricing page (1–2 days). Confirm you disclose the recurring charge amount, frequency, and cancellation method *before* customers pay. If it's buried in 10pt font or hidden behind a modal, fix it.
- Ensure cancellation is as easy as signup (3–5 days, depending on tech debt). If customers sign up online, they should cancel online. Phone-call-only cancellation will not fly under this rule.
- Track changes and keep documentation (ongoing, minimal effort). When you update your flow, document the date and what changed. The FTC may ask for evidence of compliance later.
- Monitor the final rule (ongoing, 30 minutes/quarter). This is still a *proposed* rule. Final version could land in 2026 or 2027. Check FTC.gov periodically and adjust if language tightens.
Bottom line
If you run a subscription model: monitor this closely and clean up your cancellation UX now; if you charge one-time or true pay-as-you-go: low priority.