California has initiated a significant change in the regulation of subscription services with a new law that mandates a simple “click-to-cancel” option for consumers. This law, effective from July 1, 2025, will require businesses operating in California to obtain express affirmative consent from users before enrolling them and to provide reminders and an easy online cancellation process.
The implications of this new law extend beyond California. Multiple states are considering similar regulations, creating a complicated landscape for businesses relying on automatic renewals. Companies may soon find that a national standard is necessary to manage their subscription cancellation practices effectively. The Federal Trade Commission (FTC) had previously issued a notice of proposed rulemaking to address this issue.
As corporations prepare for these upcoming changes, understanding the impact of “ghost users”—subscribers who no longer use the service but haven’t canceled—is critical. These users are likely candidates for cancellation under the new regulations, posing a potential risk to short-term revenue metrics. Businesses need to anticipate and address how this shift will affect their numbers. Offering an easy cancellation process might initially lead to a spike in cancellations but could ultimately cleanse the books of inactive revenue and stabilize long-term results.
This regulatory change also presents an opportunity. Companies that offer genuinely valuable products and services might benefit as customers grow more willing to try offerings when they know cancellations are straightforward. Promoting the ease of cancellation could serve as a confidence-builder for hesitant new users. Businesses can learn from Rob Chesnut, who consults on legal and ethical issues and highlights the importance of delighting customers over resorting to restrictive policies.
For a detailed analysis, you can read more from Rob Chesnut’s insights on the original article on Bloomberg Law.