New York City to Mandate 'Click to Cancel' for Subscriptions, Targets Hidden Fees

New York City will require businesses to offer a simple, online method for canceling subscriptions and will ban hidden or "junk" fees under a new policy set to take effect on October 1. City officials announced the new rules Friday, positioning them as a first-of-its-kind municipal effort in the U.S. to crack down on so-called subscription traps.

Key Provisions of the New Rules

The policy, detailed in a statement from the offices of Mayor Zohran Mamdani and Department of Consumer and Worker Protection Commissioner Samuel Levine, introduces two main consumer protection measures:

• 'Click to Cancel' Rule: This applies to all automatic renewal and continuous service subscriptions. Businesses must clearly disclose the terms of the subscription and provide a cancellation process that is straightforward and transparent.
• 'Junk' Fees Ban: This rule mandates that businesses advertise the total price of goods and services upfront, including all mandatory charges and fees, eliminating surprise costs at the point of sale.

Businesses found in violation of the new policies will be subject to restitution for consumers and civil penalties starting at $525 per violation, according to the announcement.

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Impact on Businesses and Consumers

The move is aimed at increasing price transparency and easing the burden on consumers. City officials, citing consumer reports, noted that hidden fees cost an average family of four an estimated $3,200 each year. For businesses operating in New York City, the rules will necessitate a review of their subscription models and checkout processes to ensure compliance by the October deadline.

Regulatory Context

The city-level initiative follows a failed attempt at federal regulation. A national "Click to Cancel" rule proposed by the Biden administration was struck down by a federal appeals court last year before it could be implemented. Mayor Mamdani, who took office in January, had campaigned on a platform that included making the city more affordable for its residents.