The Federal Trade Commission’s “click to cancel” rule is coming back around.
Last year, a federal appeals court vacated the FTC’s Negative Option Rule, aimed at addressing deceptive or unfair practices and making it easier for consumers to cancel online subscriptions. The reason? A procedural failure in the rulemaking process. The agency is now revisiting the process, and has just concluded a new public comment period on subscription disclosure, consent and cancellation.
Cancellation should be as straightforward as sign-up. A customer who can cancel easily is far less likely to dispute the charge. That’s good for the processing relationship — and in the current regulatory environment, it’s also good for staying off the FTC’s radar.
The conversation around click-to-cancel has mostly centered on what this means legally, which is certainly a worthwhile topic. However, it’s only part of the picture. The more immediate question for subscription businesses is: What will the rule mean for their payment infrastructure as a whole?
This article will focus on the operational aspect of subscription billing for adult sites.
Adult Merchants Feel Regulatory Pressure First
When the FTC increases scrutiny on how subscriptions are sold, disclosed and canceled, processors and acquiring banks have to tighten up their own standards. While the tightening happens across various sectors, “high-risk” merchants like adult sites are the first to feel it.
The reason is straightforward: Operators in adult content, like those in nutraceuticals, gaming and related verticals, are already working under stricter underwriting than mainstream merchants. Their processing relationships are harder to establish and easier to lose.
When regulatory heat increases, banks and processors become more conservative about whom they approve. Reserve requirements rise. Approval thresholds get tighter. In some cases, processors will begin unloading accounts to avoid feeling too exposed.
Building Consent Into Your Payment Stack
When regulators examine subscription billing practices, the lead issue is consent. Did the customer understand what they signed up for? What did the customer agree to? Was the recurring-charge aspect clearly disclosed? Are there records documenting all of this? That last part is especially crucial when consumers contest charges.
Unfortunately, on many websites, consent gets lost in a jumble of terms of service. That’s a big problem. A TOS page that a customer clicked through is not the same as a documented, transaction-level record of what was disclosed to whom and when.
If you need to defend your consent flow, using your terms of service will fail. Instead, you’ll need more specificity. Here’s what that looks like:
- Time-stamped records tied to the authorization event.
- IP data captured at the point of agreement.
- SKU-level disclosure so the charge exactly matches what the customer agreed to.
- Stored data that can be retrieved quickly if a dispute or inquiry arises.
Don’t think of this as a legal defense. Think of this as infrastructure that processors and banks can stand behind. Acquirers are looking at the same criteria as regulators. A clean consent record protects the merchant account, not just the legal file.
Cancel Flows Are a Chargeback Problem
We tend to look at cancellation friction as a bad consumer experience, but the FTC sees it as a deceptive business practice. That’s an important distinction because ultimately, the FTC’s perspective is the one that stands. For subscription websites, it all amounts to a dreaded chargeback situation.
When a customer can’t easily cancel, they don’t just keep paying. They call their bank. They dispute. Chargebacks are the most direct threat to a merchant account. Card networks set thresholds and processors monitor those. Exceed thresholds consistently, and you’ll likely end up without an account.
A cancel flow that discourages cancellation may retain the subscriber for another billing cycle, but it also increases the likelihood of a dispute on that charge. This is a process that rarely works in favor of the subscription website. Fortunately, it’s easy to fix.
Cancellation should be as straightforward as sign-up. A customer who can cancel easily is far less likely to dispute the charge. That’s good for the processing relationship — and in the current regulatory environment, it’s also good for staying off the FTC’s radar.
Start Collecting the Right Data Now
Regulators, processors and acquiring banks are all moving toward a data-driven standard for evaluating subscription billing practices. Merchants who have clean, organized records are in a fundamentally better position than those who don’t.
The good news is that most of this data already exists somewhere in your stack. However, it may not always be captured consistently or stored in a way that’s easy to retrieve. Here’s what to start tracking, if you’re not doing so already:
- Authorization rates by billing cycle.
- Cancellation events, including the date, method and outcome.
- Dispute and chargeback rates broken down by product or offer.
- Refund activity relative to cancellation requests.
- Consent records tied to individual transactions.
This isn’t about building a regulatory dossier. It’s about running a cleaner operation. Merchants who can pull this data quickly are better equipped to respond to a processor inquiry, fight a chargeback or demonstrate compliance should the FTC ever come knocking.
What a Stable High-Risk Subscription Setup Looks Like
Getting your subscription billing infrastructure right isn’t a one-time fix. It’s an ongoing operational standard. For high-risk merchants, the margin for error is smaller than it is for mainstream commerce. Here’s what a stable setup looks like:
- Consent captured and stored at the transaction level, not just in your TOS.
- Clear, plain-language disclosure of recurring charges before authorization.
- A cancellation flow that matches the simplicity of your sign-up process.
- Chargeback monitoring with alerts set below card network thresholds.
- Clean data on disputes, cancellations and authorizations that can be pulled on short notice.
The FTC's next move remains to be seen, but the broader trend is clear. Regulators, processors and acquiring banks are all paying closer attention to subscription billing practices, making accurate record-keeping and well-documented customer interactions increasingly important for merchants operating in the adult space.
Jonathan Corona has two decades of experience in the electronic payments processing industry. As chief operating officer of MobiusPay, he is responsible for day-to-day operations as well as reviewing and advising merchants on a multitude of compliance standards mandated by the card associations.
