Published
September 16, 2026
Subscribers outside California routinely hit a save gauntlet on the way out of an online membership: a chat agent that answers a cancellation request with discounts and then a transfer to a human. California outlawed that sequence in July 2025, the federal version of the same rule was struck down days before it took effect, and New York City starts enforcing its own on October 1, 2026.
What a Save Gauntlet Looks Like
Signing up for an online service takes a click. Leaving it often takes a conversation, and the conversation is designed. The industry term for it is a retention flow; consumers experience it as a save gauntlet, where each screen asks one more question before the cancel path reappears.A September 2026 attempt to cancel a Thrive Market grocery membership through the company's chat agent ran the sequence in full. The request to cancel produced, in order, a question about the reason for leaving, a coupon code toward upcoming orders, a discounted annual membership at $44.95 with a coupon attached, a tiered set of offers at $19.95, $29.95 and $39.95, and finally a $9.95 annual rate. After five refusals the chat handed the session to a live representative, with no wait time given.
Nothing in that sequence is unlawful as to a member outside California, which is the point of this article. Thrive Market directs California members to cancel in their account settings, the path the state requires, while members elsewhere reach the chat queue. The company has been through a California automatic-renewal case before: a group of district attorneys alleged that its enrollment screens failed to disclose subscription terms clearly and that its post-enrollment acknowledgements were deficient, and the company resolved those allegations by stipulated judgment in April 2024, paying $1.55 million in penalties, costs and restitution without admitting wrongdoing, and agreeing to let members cancel online at will.
California Puts a Cancel Button Next to the Offer
California's Automatic Renewal Law has required online cancellation for online sign-ups for years. What changed on July 1, 2025 is how precise the requirement became.Assembly Bill 2863, signed in September 2024, rewrote the cancellation mechanics at Business and Professions Code section 17602. A business may still show a departing subscriber a discount, another retention benefit, or information about what cancellation costs them. It must simultaneously display a prominently located cancellation link or button, labeled click to cancel or words to that effect, continuously and close to that offer. If the subscriber uses it, the business has to process the cancellation promptly and may not otherwise obstruct or delay it.
AB 2863 also widened the statute to cover free-to-paid conversions outright and told sellers to keep the receipts: verification of a consumer's affirmative consent has to be retained for at least three years, or one year after the contract ends, whichever is longer, which is what gives a regulator a paper trail to audit.
The distinction is between an offer a subscriber can walk past and an offer a subscriber has to answer. A discount shown beside a live cancel button is a sales pitch. The same discount shown in place of the cancel button, five times, is the obstruction the statute names. The amendments also cover the telephone equivalent, so a seller that enrolls by phone cannot answer the cancellation call with a queue built to outlast the caller.
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The Federal Rule Died Six Days Before It Started
The Federal Trade Commission tried to make that the national standard. Its amended Negative Option Rule, finalized in 2024 and known everywhere as click-to-cancel, would have required sellers to make cancellation at least as easy as enrollment and to accept cancellation through the medium used to sign up. The compliance date was July 14, 2025.It never arrived. On July 8, 2025, the U.S. Court of Appeals for the Eighth Circuit vacated the rule in its entirety in Custom Communications, Inc. v. Federal Trade Commission. The defect was procedural rather than substantive: the Commission had skipped the preliminary regulatory analysis that Section 22 of the FTC Act requires when a rule is expected to have an annual economic effect of at least $100 million, and the court treated that omission as prejudicial error. The opinion acknowledged the agency's aims and vacated the rule anyway.
What survives is the pre-existing law. The Restore Online Shoppers' Confidence Act still requires a simple mechanism to stop recurring charges for anything bought online, Section 5 of the FTC Act still reaches deceptive practices, and state automatic-renewal statutes still apply. What does not exist is a single national rule saying the exit has to be as easy as the entrance, which is why cancellation rights now depend on a zip code.
New York City Closes Its Own Loophole on October 1
The city is filling that gap locally. The Department of Consumer and Worker Protection adopted a click-to-cancel rule on July 10, 2026, the first municipal rule of its kind in the country, and it takes effect October 1, 2026.The core requirement mirrors California's. Cancellation has to be available through the same medium as enrollment, so an online sign-up carries an online cancellation. A business that accepts sign-ups through several channels has to accept cancellations through all of them, and a business that enrolls people in person has to offer an online option as well. Unreasonable barriers are prohibited by name, including misleading cancellation instructions, delays in processing, hanging up on a caller, and retention offers deployed in a way that impedes the request.
Scope is broad and enforcement is local. The rule reaches any business offering automatic-renewal or continuous-service subscriptions to consumers in New York City regardless of where it is headquartered, covering streaming services, gyms, software, meal kits and news subscriptions, with carve-outs for banks, credit unions and other regulated financial institutions. Violations are treated as deceptive trade practices under the city's Consumer Protection Law, carrying civil penalties that start at $525 per violation and run to $3,500 under the rule's schedule, and a violator may also be required to refund the consumer. New Yorkers already had gym-specific protections under state law, covered in OCA's guide to the New York health club membership cap.
The Companies Regulators Have Caught Doing This
The save gauntlet is not a Thrive Market invention, and the clearest evidence of how common it is comes from the enforcement docket. Six cases describe the same design in six industries.• SiriusXM is the closest match to the chat sequence above. The New York Attorney General sued in December 2023, alleging the company forced subscribers to reach an agent by phone or chat and trained those agents to run a six-part conversation with as many as five retention offers; the state put the average at 11.5 minutes by phone and about 30 minutes online, with one subscriber held in a chat for 40 minutes. In November 2024 a New York court found the process violated federal ROSCA and ordered the company to stop requiring New York subscribers to go through a live agent (People v. Sirius XM Radio Inc., N.Y. Sup. Ct., New York County).
• The New York Times was sued by the same office over a sign-up that took minutes online while cancellation ran through phone agents, limited hours and retention pitches. It resolved with restitution for New York subscribers; OCA's page on the New York Times cancellation settlement has the detail, and its claim window has closed.
• Amazon ran a Prime cancellation flow the FTC's complaint said was known internally as "the Iliad." Amazon settled in September 2025 for $2.5 billion, a $1 billion civil penalty plus $1.5 billion in consumer refunds, and agreed to change how Prime is sold and canceled (FTC v. Amazon.com, Inc., No. 2:23-cv-00932 (W.D. Wash.), stipulated final order entered September 25, 2025). The Amazon Prime settlement claim page covers who gets paid.
• Uber is defending an FTC suit, joined by 21 states and the District of Columbia, alleging Uber One members faced as many as 23 screens and 32 actions to cancel, and had to contact customer service outright within 48 hours of a billing date (FTC v. Uber Technologies, Inc., No. 3:25-cv-03477 (N.D. Cal.), filed April 21, 2025). The allegations are unproven and the case is pending.
• Adobe was sued by the Justice Department and the FTC in June 2024 over an early termination fee and a cancellation path that routed callers through repeated transfers. The suit was brought by the Justice Department on the FTC's referral (United States v. Adobe, Inc., No. 5:24-cv-03630 (N.D. Cal.)), and a $150 million resolution, half civil penalty and half services, was announced in March 2026 subject to court approval. See OCA's Adobe subscription settlement page.
• LA Fitness, whose operators run more than 600 clubs for over 3.7 million members, was sued by the FTC on August 20, 2025 (FTC v. Fitness International, LLC). The complaint alleges the chains accepted cancellation only in person or by certified or registered mail, refused it by phone and email, and staffed in-person cancellation with a single designated employee available largely during working hours. The case is pending and the allegations are unproven.
California's own task force has made the same point twice in the meal-kit and grocery aisle. HelloFresh paid $7.5 million in August 2025 to resolve CART allegations that included the absence of an easy cancellation mechanism, without admitting liability, on a consent judgment entered in Santa Clara County Superior Court, and Thrive Market paid $1.55 million on a stipulated judgment entered in Santa Barbara County Superior Court in April 2024. The HelloFresh California settlement page covers the restitution half of that judgment.
Private litigation covers the same ground where a regulator has not. A class action alleging Peacock renewed subscriptions and charged customers without the disclosures and authorizations California law requires produced a $3.74 million fund, which Peacock agreed to without conceding the claims; the Peacock auto-renewal settlement page has the terms. A $4.8 million multistate agreement covering the VIP membership programs behind JustFab, ShoeDazzle and FabKids addressed how members were enrolled and how they could get out, and is covered on the JustFab VIP membership settlement page.
The common thread is not the chatbot. It is that every one of these companies sold the subscription through a channel the customer could use alone and took it back through a channel that required another person, which is the precise asymmetry California, New York and now New York City have written into law.
Where the Fight Moved After the Federal Rule Died
With no national rule, the rulemaking shifted to states and, now, cities. New York is the clearest example of the layering that produces, because subscribers there are already covered by a state statute that changed before the city rule was written.New York State Changed First
An amendment to New York's automatic renewal provisions, General Business Law sections 527 and 527-a, passed in the May 2025 budget bill and took effect on November 5, 2025. It requires a cancellation mechanism at least as easy to use as the one the consumer used to consent, through the same medium, and it requires cancellation to be available through every medium the business accepts consent through.It also names the conduct it forbids. A business may not impose unreasonable or unlawful conditions on cancellation, refuse to acknowledge a request, obstruct it, or unreasonably delay it, and the statute gives examples: hanging up on a consumer who calls to cancel, giving false information about how to cancel, misrepresenting what cancellation costs, and misrepresenting why a request is taking so long. Retention offers remain permitted and cannot be used to impede the request. Longer plans carry a renewal notice 15 to 45 days before the cancellation deadline, and material changes to price or terms require notice 5 to 30 days out.
That is the backdrop to October 1. A New York City subscriber already has the state statute; what the city rule adds is a local agency that can assess penalties directly rather than a claim that has to travel through the Attorney General or a private suit.
Other States Keep Adding Rules
Vermont, whose 2019 statute is already among the strictest in the country, has two bills in its 2026 session. As introduced, H.668 would require online termination at least as easy as the way the contract was accepted, and would extend advance renewal notices to contracts with an initial term of one month rather than a year. S.310 would add an annual reminder of the right to cancel, with easy-to-use options including email, and clarifies that an email address is an acceptable cancellation route. New York has further bills live in its 2025-2026 session as well, A3928 and S5615A, which as introduced would require notice before a trial period ends, disclosure of the cancellation process and upcoming charges, and conditions on when a discount offer may be presented.The practical effect of the patchwork runs in the consumer's favor. Maintaining separate cancellation flows for fifty jurisdictions costs more than building one to the strictest standard, so national sellers tend to converge on California and New York, and subscribers elsewhere get the benefit without the statute.
The FTC Is Trying Again
The Commission did not drop the project after losing in the Eighth Circuit. It approved an advance notice of proposed rulemaking on negative option plans and sent it to the Office of Information and Regulatory Affairs on January 30, 2026, and the notice published in March 2026 with comments due April 13, 2026. It asks whether the existing Negative Option Rule should be amended, what alternatives exist, which provisions of the vacated rule should return, and what should be exempt.An advance notice is the first step of a rulemaking, not a proposed rule, and the defect that killed the last attempt was a skipped economic analysis, so this round is being built slowly on purpose. A final rule is years away rather than months. Until one lands, the FTC enforces subscription cases under ROSCA and the FTC Act, and cancellation rights keep depending on where the subscriber lives.
What to Do While You Are Still in the Gauntlet
• Name the law if it applies to you. A California subscriber who signed up online is entitled to a cancellation button on the same screen as the discount, and saying so in the chat often surfaces the account-settings path immediately.• Decline every offer in writing and repeat the request. A transcript showing a clear cancellation request, repeated and refused, is the document that matters later.
• Record the timestamp. Save the transcript, the date and time of the first request, the agent name if given, and any confirmation number or email.
• Watch the next two statements. A charge that lands after a documented cancellation is a disputable charge, and the card issuer is the faster remedy.
• File the complaint. The FTC takes subscription complaints through its online complaint process, state attorneys general take them directly, and New York City residents can file with the Department of Consumer and Worker Protection through the city's 311 consumer complaint portal. The California cases collected on OCA's auto-renewal class action page started the same way.
Frequently Asked Questions
Is a company allowed to make me refuse five discounts before it cancels my subscription?
It depends where the subscriber lives. In California, a business that shows a retention offer during an online cancellation must display a prominent click-to-cancel link or button alongside it and process the cancellation promptly when it is used, so a sequence of offers that hides the exit does not comply. Most other states have no equivalent same-medium requirement, so the offers and the transfer to a live agent are lawful there, subject to the general federal ban on deceptive practices.
What happened to the FTC's click-to-cancel rule?
The Eighth Circuit vacated the FTC's amended Negative Option Rule in its entirety on July 8, 2025 in Custom Communications, Inc. v. Federal Trade Commission, six days before the July 14, 2025 compliance date. The court held that the Commission skipped a preliminary regulatory analysis required for a rule with an annual economic effect of at least $100 million. The FTC can still pursue deceptive subscription practices under the FTC Act and ROSCA.
What does New York City's click-to-cancel rule require and when does it start?
The Department of Consumer and Worker Protection adopted the rule on July 10, 2026 and it takes effect October 1, 2026. A subscriber who signed up online must be able to cancel online, a business that accepts sign-ups through several methods must accept cancellations through all of them, and in-person enrollment must carry an online cancellation option. Unreasonable barriers, including retention offers used to impede cancellation, are prohibited and treated as deceptive trade practices under the city's Consumer Protection Law.
Is a national click-to-cancel rule coming back?
The FTC restarted the process. It approved an advance notice of proposed rulemaking on negative option plans and sent it to the Office of Information and Regulatory Affairs on January 30, 2026; the notice published in March 2026 with comments due April 13, 2026. An advance notice is the first step rather than a proposed rule, so a final rule is likely years away. In the meantime the FTC enforces subscription cases under ROSCA and the FTC Act, and state and city rules do the specific work.
What can a subscriber outside California do when a chatbot will not cancel?
Decline each offer in writing, ask directly for the account-settings cancellation path, and save the transcript, timestamp and any confirmation number. Federal ROSCA still requires a simple mechanism to stop recurring charges for anything bought online, complaints can be filed with the FTC and the state attorney general, and a charge that lands after a documented cancellation can be disputed with the card issuer.
Sources
• California Business and Professions Code § 17602, as amended by Assembly Bill 2863 (approved September 24, 2024; operative July 1, 2025).• Custom Communications, Inc. v. Federal Trade Commission, No. 24-3137 (8th Cir. July 8, 2025) (per curiam), vacating the FTC's amended Negative Option Rule.
• New York City, NYC's "Click to Cancel" rule goes live this fall, and the Department of Consumer and Worker Protection's announcement of the adopted rules (July 10, 2026).
• Los Angeles County District Attorney, Thrive Market consumer protection judgment (Santa Barbara County Superior Court, April 30, 2024).
• New York Attorney General, suit against SiriusXM (December 2023) and the November 2024 decision finding a ROSCA violation.
• Federal Trade Commission, $2.5 billion Amazon Prime settlement (September 25, 2025); suit against the operators of LA Fitness (August 2025); action against Uber over Uber One (April 2025) and the amended complaint joined by 21 states (December 2025); action against Adobe (June 2024).
• Los Angeles County District Attorney, HelloFresh $7.5 million consent judgment (August 2025).
• New York General Business Law §§ 527 and 527-a, as amended by the May 2025 budget bill, effective November 5, 2025.
• Vermont H.668 and S.310 (2026 session), as introduced; 9 V.S.A. § 2454a (Vermont's existing automatic renewal statute). New York A3928 and S5615A (2025-2026 session), as introduced.
• Federal Trade Commission, Negative Option Rule (Federal Register, November 15, 2024), and the Commission's business guidance on the amended rule. The Commission's advance notice of proposed rulemaking on negative option plans was approved January 30, 2026 and published in March 2026, with comments due April 13, 2026.
• Federal Trade Commission, letter to Governor Newsom supporting AB 2863 (September 4, 2024).
• Thrive Market help center cancellation instructions, reviewed September 2026.
About This Page
OpenClassActions.com is a consumer news and information site, not a law firm. This article is general information about automatic-renewal and cancellation rules and is not legal advice about any particular subscription or dispute.
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