New York City to Implement 'Click to Cancel' Rule, Ban Hidden Fees

New York City will require businesses to offer a simple online cancellation method for subscriptions and disclose all mandatory fees upfront, under a new policy set to take effect on October 1. City officials announced the new rules on Friday, aiming to eliminate so-called "subscription traps" and "junk fees" for consumers.

New Rules Target Subscriptions and Hidden Fees

The policy, which officials described as the first of its kind for a U.S. municipal government, has two main components. The first is a "Click to Cancel" rule that applies to all automatic renewal and continuous service subscriptions.

Under the new regulations, businesses must:

• Clearly and conspicuously disclose all subscription terms before the consumer pays.
• Provide a simple and transparent online cancellation process for any subscription started online.
• Advertise the full and final price of goods and services upfront, including all mandatory charges and fees.

Enforcement and Financial Impact

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Businesses that fail to comply with the new rules will be subject to enforcement actions from the Department of Consumer and Worker Protection (DCWP). Penalties will include restitution for affected consumers and civil penalties beginning at $525 per violation, according to the official statement.

City officials highlighted the financial burden of hidden fees on consumers, citing consumer reports that estimate such charges cost an average family of four around $3,200 each year. The new policy is part of a campaign promise by Mayor Zohran Mamdani to improve affordability in the city.

Broader Regulatory Context

The move by New York City comes after a similar effort at the federal level faced a legal challenge. A national "Click to Cancel" rule introduced by the Biden administration was struck down by a federal appeals court last year before it could go into effect, making the city's new policy a significant local-level push for this type of consumer protection.