Apps and the FTC Click-to-Cancel Rule

How to avoid fines, retain users, and grow revenue in 2025 and beyond

With the Click-to-Cancel rule taking effect in mid-2025, some app businesses may feel a growing sense of concern. This new rule would enable users of some subscription-based apps to cancel their memberships with a single click. While there are apps that enable this already, some route users to call centers or other avenues in an effort to discourage cancellation. 

If you haven’t been carefully monitoring your app’s churn rate, now is probably the time to do so. The best way to safeguard your business is to ensure that your app offers excellent value and that its user experience is nothing short of fabulous.

For those concerned that an easier opt-out will negatively impact revenue, it may be time to consider hybrid monetization strategies. The good news is that it’s easier to get started—and to be successful—than you think.

Here’s a quick look at the upcoming rule, and what you can do to prepare. 

What is the Click-to-Cancel Rule?

The Click-to-Cancel rule is an amendment to the FTC’s Negative Option Rule, which is intended to combat “misleading enrollment tactics, billing practices, and cancellation policies, and provide businesses with clear rules of the road,” in an effort to build consumer trust. 

To clarify, “Negative Option” in the FTC’s document refers to what we’d refer to as an “opt-out.” An example of this is the consumer who signs up for the free trial of the premium version of the app and then forgets to opt out before the fees kick in. While this may be good for the bottom line in the short term, the FTC’s stance is that it harms consumer trust in the long term – and that’s what they’re attempting to address with this rule. 

The provisions of the rule include: 

• Simplified cancellation: In short, it has to be as easy to cancel a subscription as it is to initiate one. For example, if a customer didn’t have to speak to a representative to enroll, they don’t have to speak to a representative to cancel, either. 
• Clear disclosures: Potential subscribers must be able to see all of the subscription terms, including costs, renewal conditions, when trial periods or promotions end, withdrawal deadlines, and any fees associated with cancellation. In the words of the FTC, all of this information must be “clear, conspicuous, and available to your customers before they enroll.” Note that sellers must be able to show that consumers had access to this information before they signed up. 
• Express informed consent: Explicit consent for subscription terms must be obtained before a customer can be charged any fees. 
• Prohibition of material misrepresentation: This is a simple best practice. In short, don’t make false claims or knowingly omit important information about an offer or product. 

The rule is set to take full effect this spring, so if you think it will impact your business, you still have some time to prepare. 

A key concern for some developers may be that simpler cancellation processes will lead to increased churn. If it’s easy to opt out, more customers may take advantage of the simpler process, abandoning an app for even a minor grievance. There are some strategies to safeguard your business from negative impacts.

It’s important to remember that failure to comply with the rule could result in FTC enforcement actions and/or financial penalties.

Preparing for Click-to-Cancel

There are a few steps app developers can take to ensure readiness for the new rule when goes into effect. 

Ensure compliance. 

Before you pass go, before you consider any strategies to mitigate potential losses, take the clear first step: Comply with the Click-to-Cancel rule. 

• Make sure your app users can cancel their subscriptions as easily as they signed up for them. 
• Use plain language and clear directions to guide them through the cancellation process.
• Avoid unnecessary prompts, confusing steps, or attempts to dissuade cancellations (beyond a single “Are you sure?” before the final step).

Confirm you have a great app and great user experience.

The best way to combat churn is to create an app experience your users love and never want to leave. For reference, here are the top reasons users abandon apps:

Business of Apps

You’ll want to be mindful of these reasons, but also keep in mind that a great, engaging app that offers value and a great experience can overcome a lot of these hurdles. 

Here are a few other tips to reduce churn overall so that users keep your app or game installed and in use:

• Make onboarding awesome: According to Business of Apps, 17% of app users uninstall an app after the first use. Yikes! If you’re seeing stats that indicate your users are abandoning after the first open, your onboarding experience may be the issue. Keep that first interaction simple and clean, and make sure your value proposition is front and center. (Check out our Best Practices for New User Onboarding for more tips to improve your users’ initial app experience.)
• Personalize the app experience: AI does a great job of personalization based on how users engage with your app, especially in mobile gaming. According to AppLovin’s Daniel Tchernahovsky, “Developers can use AI to keep games endlessly engaging, ensuring that no two playthroughs are the same. For example, developers can mobilize AI to analyze a player’s actions and preferences and generate customized content on the fly — including unique levels, environments, and narratives.” Furthermore, Tchernahovsky says, “AI can also be deployed to analyze a player’s performance in real-time and adjust a game’s difficulty level accordingly. That way, games remain challenging but not frustrating, and players of all skill levels can maintain high levels of motivation and excitement”
• Keep users engaged outside of the app: Stay in touch with your app’s users via email, text, or push messaging – with permission, of course. It’s a tightrope walk to mitigate uninstall reason #3 (“never used”) with reason #6 (“too many notifications”) but loads of apps have cracked the code, so yours probably can too. Reminders to maintain streaks, join special events, or announcements about flash sales or loyalty events are smart ways to entice users to return to your app. 

The first two weeks after installation are critical: That’s when nearly three-quarters (73%) of consumers decide whether to keep or remove an app. More than half (57%) will give an app one or two chances before deciding to uninstall it. 

Improve transparency to gain user trust. 

If you’re confident in the user experience you’re offering to your subscribers, earn their trust by being even more transparent about your policies. You can do this by clearly outlining costs, renewal terms, and cancellation policies in a place users can easily find. In a perfect world, share this information with users before they subscribe.

It’s also wise (and transparent) to send regular reminders about upcoming renewals so users have ample time to decide. Offering hard-to-refuse deals at renewal time doesn’t hurt, either. 

Monitor and adapt as necessary.

Stay informed about FTC guidelines and updates. Rules are subject to change and you don’t want to be caught out of compliance. At the same time, monitor the effectiveness of your retention strategies and adjust as necessary to maintain a balance between compliance and your business objectives.

Diversify your revenue stream.

If you’re relying on subscriptions alone for revenue, you may want to consider other ways to monetize your app. Hybrid monetization – adding in-app advertising to maximize your profitability – may be a great option. 

While in-app purchases account for about 25% of app revenue currently, the bulk –  a full 75% –  comes from advertising. The in-app advertising market is expected to hit $390.00 billion in 2025, with the average annual ad spend per user at about $59.23 this year. Statista predicts an annual growth rate of 8.17%, hitting a projected market volume of $533.90 billion by 2029.

App developers may be reticent to introduce ads into their mobile apps, but they shouldn’t be. A smart monetization strategy should include rewarded ad placements, where users can choose to engage with ads to obtain or unlock a feature they might have paid for previously. This strategy has proven effective in the gaming world and can be effectively applied to non-gaming apps, as well. As Tchernahovsky noted in a PocketGamer podcast, “I’ve talked to many founders and developers at these IAP businesses who still have this idea of ads muddying the quality [of the game]. The truth is users want to engage with them. It’s not like you’re forcing an interstitial onto them. Most of these games actually are going in the rewarded direction.” 

Ready or not, here it comes.

The FTC’s Click-to-Cancel rule signals a shift toward greater consumer protection and transparency in subscription-based business models. While it may seem alarming, it really shouldn’t be. App-based businesses and game developers should already be following best practices to encourage engagement, loyalty, and growth. For those who are lagging in their commitments to transparency, consider this a pivotal moment to refine your practices, align with compliance requirements, and foster stronger relationships with your users.

By acting now, you can turn this regulatory challenge into an opportunity to improve your app and grow user trust and loyalty, positioning your business for even greater success in the long term.