Understanding the FTC’s Updated Negative Option Rule for 2025
The U.S. Federal Trade Commission’s (FTC) long-awaited enhancements to its Negative Option Rule took effect in January 2025, marking a transformative shift for businesses operating subscription, auto-ship, and recurring billing programs—including those offering hemp-derived CBD products. For brands and retailers in this quickly evolving sector, compliance with these federal regulations is more critical than ever, particularly as the FTC has signaled that enforcement—while deferred on some provisions to mid-2025—will ramp up, with state attorneys general (AGs) poised to cooperate on high-risk cases.
This post unpacks the new federal rules, explores their impact on hemp/CBD auto-ship clubs and subscription services, and lays out actionable guidance for compliance and risk reduction in 2025 and beyond.
The Scope: What Is the FTC Negative Option Rule?
The amended FTC Negative Option Rule targets any arrangement in which a consumer’s silence or failure to take affirmative action is used to impose a recurring charge—often called “negative option” plans. For hemp and CBD businesses, this includes:
- Monthly auto-ship programs
- Subscription box memberships
- Loyalty clubs with periodic charges
- Free trial offers converting to paid subscriptions
Key Takeaway: If you offer any recurring product shipments or charge periodic membership fees, you are squarely in scope.
What Are the 2025 Requirements?
1. Clear, Conspicuous Disclosures Upfront
All material terms must be disclosed prominently and unambiguously before the customer agrees. The rule specifically calls for:
- The fact that the offer involves recurring charges
- The frequency and amount of charges
- How to cancel and any termination conditions
- Any minimum purchase or commitment period
Example: Placing the phrase “This is a subscription: you will be charged $59 every month until you cancel” directly above the payment button, not hidden in fine print or pop-ups.
Prior to billing, you must obtain the consumer’s positive, informed agreement to all negative option features. This usually means an unchecked “I agree” checkbox that consumers must click after seeing all necessary disclosures.
- Bundling auto-renewals or add-ons without express consent is now prohibited.
Action Point: Audit your checkout process to ensure there is no pre-checked box and every subscription element requires active customer approval.
Consumers must be able to cancel their subscription at least as easily as they enrolled—known informally as “click-to-cancel.”
- If you allow online enrollment, online cancellation must be equally accessible, immediate, and straightforward (no hidden pages, retention calls, or email-only hurdles).
- All paths—web, app, social platform—must provide consistent, direct cancellation options.
Compliance Best Practice: Embed a readily visible “Cancel Subscription” button in user accounts, confirmation emails, and order receipts.
4. Prohibition on Material Misrepresentations
You may not make any material misrepresentation connected to a negative option plan—including about product benefits, pricing, billing frequency, or cancellation processes. This applies equally to B2B contracts (e.g., wholesale, distribution) and consumer offers.
Enforcement Timeline: What’s Changing in 2025?
The FTC’s amended rule came into effect January 2025, with extended enforcement grace periods for certain requirements (notably for businesses needing technical overhauls to support click-to-cancel). Full compliance, especially for complex ecommerce platforms, is expected by mid-2025.
- Expect increased scrutiny as this deadline approaches, especially from FTC regional offices and state AGs focused on deceptive practices, youth-access products, or misleading health claims in the CBD space.
- Enforcement actions may include civil penalties, consumer redress, and injunctive relief.
Unique Risks and Compliance Traps for Hemp/CBD Subscriptions
Hemp and CBD companies often rely on direct-to-consumer subscriptions as a major revenue stream. Yet, this sector faces added risk due to:
- Youth appeal concerns: If product design, advertising, or subscription pathways are perceived as targeting underage consumers, expect coordinated investigations from state and federal authorities.
- Health claim scrutiny: Assertions about health or wellness benefits tied to subscription programs may be investigated under both the FTC Rule and separate advertising standards.
- Opaque cancellation flows: Common industry pitfalls include burying the cancellation button, requiring phone calls to cancel, or pushing aggressive retention offers before permitting cancellation—all noncompliant under the new Rule.
Pro Tip: Compliance isn’t just a tech fix; customer service, DM/social messaging workflows, and third-party merchant providers must also follow compliant cancellation and consent protocols.
Building a Compliant Subscription Program: Step-by-Step
1. UX and Checkout Audit
- Visibility: Are disclosures both before and at the point of purchase, above the payment or “complete order” button?
- Consent: Are all recurring charge terms agreed to via an active click—never a pre-checked box?
2. Confirmation and Ongoing Communication
- Clear Confirmation Email: Send immediately after signup, recapping subscription/cancellation terms.
- Renewal Reminders: Provide advance notice before each charge or shipment, as required by state laws (e.g., California Auto-Renewal Law).
- Cancel Functionality: “One click” or equivalent cancellation through all the same channels used to enroll—web, mobile, social.
3. Granular Consent Records
- Maintain logs of consent (date/time, user, action taken, terms accepted) for each subscription enrollment. This is critical for FTC defense and resolving consumer disputes.
4. Multichannel Testing
- Regularly test all subscription and cancellation flows for compliance parity on desktop, mobile web, app, and third-party (e.g., Instagram Shop, Facebook Marketplace) storefronts.
- Track and resolve discrepancies across these channels that may hinder compliance.
Frequently Asked Questions
Q: Do these rules apply to B2B CBD subscription programs?
Yes. The FTC’s rule is not limited to consumer sales. Any negative option arrangement, including business-to-business recurring contracts (distributor supply plans, auto-restock programs), must disclose material terms and allow equivalent cancellation ease.
Q: Can we require email or a phone call to process cancellation?
No, if customers enrolled online they must be able to cancel online in a comparably simple fashion. Adding steps—or retention obstacles—will violate the FTC Negative Option Rule in 2025.
Q: What should we expect on enforcement?
- The FTC and state AGs are closely monitoring the hemp/CBD sector for deceptive practices in auto-ship and club programs.
- High-profile sweeps against companies with youth-oriented marketing or problematic health claims are likely in late 2025 and beyond.
The timeline for full compliance is tight. All brands offering CBD or hemp auto-ship or club services must act now to:
- Review and overhaul digital experiences for both sign-up and cancellation
- Re-train customer service agents and update call-center and direct message scripts
- Integrate consent logging within e-commerce platforms
- Coordinate with compliance, legal, and IT to address all updated FTC mandates before mid-2025
Key Takeaways for CBD Subscription Operators
- Act now. The enhanced FTC Negative Option Rule is in force, and a full enforcement push is expected later in 2025.
- Prioritize UX parity in cancellation flows, aligning with “click-to-cancel” requirements on every digital channel.
- Be proactive: Regular audits, cross-channel testing, and robust recordkeeping are your best defenses against regulatory actions.
- Stay vigilant regarding health claims and youth marketing—offenses in these areas are prioritized for state/FTC coordination.
For detailed compliance solutions, expert news analysis, and the latest federal and state e-commerce regulations for CBD and hemp, turn to CannabisRegulations.ai—your trusted industry partner.
