The US’s ‘click-to-cancel’ rule could soon be law. What would that mean for streaming services?

August 20, 2025

	Digital service providers (DSPs) such as Spotify, Netflix, and other subscription-based platforms briefly celebrated in July after a U.S. federal appeals court struck down the Federal Trade Commission’s (FTC) proposed “click-to-cancel” rule. The FTC’s plan would have required that cancelling a subscription be just as straightforward as signing up for one in the first place. This proposal placed DSPs in a difficult position. On one side, consumers have voiced growing frustration with the obstacles companies often place in the way of cancellation. Hard-to-cancel services create a negative image and foster distrust. On the other side, businesses argue that simplifying cancellations could reduce revenue, introduce new security concerns, and eliminate valuable insights into customer behavior. The appeals court struck down the rule on the grounds of procedural errors by the FTC, particularly its failure to assess the economic impact of the regulation. But that wasn’t the end of the story. Shortly afterward, Democratic lawmakers introduced the Click to Cancel Act, a bill that would reintroduce the FTC’s original proposal in the form of legislation. Unlike agency regulations, legislation does not require lengthy cost assessments, even if businesses project large financial losses. This makes the bill potentially easier to pass into law. The act was introduced in the House by Representatives Brad Sherman, Seth Magaziner, and Chris Deluzio, with Senator Ruben Gallego introducing a companion bill in the Senate. At the moment, DSPs face little immediate threat. With Republicans controlling both chambers of Congress and Donald Trump in the White House, the likelihood of passage is slim. Still, many analysts argue that over the longer term, rules like click-to-cancel could become the global standard. The companies that opposed the FTC in court were not small players. Plaintiffs included telecom firms Charter, Comcast, and Cox, as well as entertainment giants Disney and Warner Bros. Discovery. Their opposition stemmed from concerns about revenue. Analysts estimate that even a modest 0.5% rise in cancellations could cut annual revenue forecasts by 2–3%. Because most streaming companies now depend heavily on long-term subscribers—responsible for about 80% of revenue—higher churn rates could significantly damage profitability and stock performance. Beyond revenue, DSPs cite security risks. A simplified cancellation process could be exploited by bots or malicious actors, leading to mass account cancellations without user consent. Such incidents would not only cause financial losses but also harm brand reputation, as customers discover their accounts terminated unexpectedly. Another key issue is data collection. The cancellation process often provides companies with critical insights into customer dissatisfaction and churn causes. Without that feedback, businesses might struggle to adapt, whether cancellations are driven by economic pressures or dissatisfaction with service quality. For DSPs, making cancellations easier isn’t just about removing extra steps. It could require investing in new security systems and rethinking data-gathering strategies—both costly undertakings. Politically, the current administration remains hostile to the rule. President Trump has generally opposed heavy-handed regulation, and Trump-appointed FTC officials have already voted against it. The FTC itself appears to have abandoned further pursuit, choosing not to appeal to the Supreme Court or restart the process. That leaves the Click to Cancel Act in Congress, where it is unlikely to pass without bipartisan support. Yet political winds shift. If Democrats regain control of Congress in 2026 or the White House in 2028, the rule could return, either through legislation or a reshaped FTC. Even if the U.S. stalls, international trends suggest stricter rules are coming. California already has an Automatic Renewal Law that prohibits unnecessary steps in cancellation. Similar measures exist in about 20 U.S. states. In the European Union, the Digital Services Act bans “dark patterns,” including unnecessarily complicated unsubscribe processes. The United Kingdom’s 2024 Digital Markets Act also requires simple cancellation options, while mandating renewal reminders. South Korea’s Fair Trade Commission has gone after DSPs like Spotify and Netflix for making cancellation mid-cycle difficult and for failing to inform users of refund rights. Taken together, these examples show growing global impatience with convoluted cancellation systems. Consumers, regulators, and legislators increasingly view such practices as unfair and deceptive. For DSPs, this signals an inevitable trend: at some point, cancelling a subscription may have to be as simple as clicking “unsubscribe.” The costs of compliance may be high, but preparing early could help companies adapt smoothly. Businesses that delay could face sudden regulatory changes and consumer backlash. In the end, while the Click to Cancel Act may not pass today, the broader shift toward consumer-friendly cancellation policies is unmistakable. Source: www.musicbusinessworldwide.com