NYC Click-to-Cancel Rule Puts Software Subscriptions on Notice

A city rule with national reach

New York City started enforcing its Click-to-Cancel rule on October 1, 2026, and became the first U.S. city to set its own subscription-cancellation standard.12 The rule is short. If a business lets you sign up with a click, it has to let you cancel the same way. Companies also have to state subscription terms clearly and tell consumers what rights they have when they buy or cancel.1 The Department of Consumer and Worker Protection (DCWP) enforces it. Fines are $525 for a first violation, $1,050 for a second and $3,500 for each one after that, and violators can also owe restitution.2

Most early coverage focused on gyms and streaming services. Software subscriptions belong in the same conversation. One retail-compliance analysis lists consumer software seats inside the rule's definition, alongside subscription boxes and free trials that turn into paid plans.19 The rule also reaches businesses that sell to New York City consumers even if they have no office or store in the city. A subscription company based anywhere in the country can therefore end up dealing with a city regulator.1918

What the rule actually demands

Before asking for payment details or consent, a business has to disclose the price, how often it bills, the renewal terms, the cancellation deadline and the ways to cancel.2 There are also notice windows. Free trials longer than a month need a reminder 3 to 21 days before the first charge. Qualifying long-term renewals need notice 15 to 45 days before the cancellation deadline. Material changes such as price increases need five to 30 days' notice.12

The city's rule closely follows New York State's automatic renewal law, General Business Law § 527-a, with two notable differences. First, a customer who enrolled in person has to be offered an online way to cancel; state law allows a phone line instead.912 Second, the city rule bans "obscuring" information about how to cancel. Lawyers at Davis+Gilbert read that word as a possible basis for treating cancel links buried deep in account menus as violations, even if the information on the page is accurate.13

Retention offers are still allowed, within limits. Companies can show a discount when someone tries to leave, as long as the offer does not block or unreasonably delay the cancellation.13 For subscription businesses that depend on multi-screen "save" flows, that is the line that matters.

Where the coverage diverges

The reporting mostly agrees on the basics, but a few details don't line up. NBC New York said violators face $525 per violation, which leaves out the increases for repeat violations described by TechSpot, Business Insider and law firms.328 The savings figures also differ. City materials give a range of $21.5 million to $162.5 million a year, while some outlets report only the top number, saying the rule could save New Yorkers "more than $160 million."53 The low end is the safer number to quote.

There is also a real disagreement about consent. A Lexology summary says businesses must obtain affirmative consent under the rule.20 Attorneys at ZwillGen, writing in Corporate Compliance Insights, say the city rule leaves out the state's express requirements for affirmative consent and post-consent notices.9 In practice this matters less than it seems, because the state requirements still apply to the same businesses. Still, compliance teams should check the adopted rule text themselves and not rely on either summary.

One outlet called the measure "legislation."7 It is actually an agency rule, adopted by DCWP under Mayor Zohran Mamdani's Executive Order 10.1614

The software licensing open question: B2B

For software vendors, the biggest open issue is whether the rule covers business-to-business subscriptions. During the comment period, the Manhattan Chamber of Commerce asked DCWP to clearly exclude B2B deals, arguing that negotiated contracts are different from consumer sign-ups. The Chamber also argued against the same-medium requirement and the limits on save offers.14 Kilpatrick Townsend noted that the proposal did not address B2B coverage, and pointed out that Colorado's amended law now covers it explicitly.18 The city's consumer protection law has historically applied mainly to consumer transactions.18

My reading is that enterprise software licensing, with negotiated multi-year agreements and procurement-run renewals, is probably outside the rule. Self-serve plans bought with a personal card by freelancers, students and hobbyists are probably inside it. That is where a lot of exposure sits for creative tools, productivity apps and AI subscriptions. Until DCWP brings cases, where that line falls is an assumption, not settled law.

Adobe shows what's at stake

The best guide to how cancellation friction gets priced in software comes from federal enforcement, not from New York. Adobe agreed to a $150 million settlement with the Justice Department, made up of a $75 million civil penalty and $75 million in services. The government had alleged that Adobe hid the early termination fee on its "annual, paid monthly" plan and made cancelling difficult.3233 That fee was 50% of the remaining payments for customers who cancelled after the first 14 days.31 A federal judge approved the order in April 2026, and Adobe did not admit wrongdoing.31 The UK's Competition and Markets Authority opened its own investigation of the same fee structure in March.32 A private class action filed in April adds more pressure.35

The settlement does not ban early termination fees. It requires Adobe to disclose them clearly before enrollment and to provide easy ways to cancel.31 New York City's rule has the same logic: annual commitments with monthly billing are still legal, but the terms have to be visible at sign-up, and cancelling cannot be the moment a customer first learns about a fee. Earlier filings in the Adobe case quoted an unnamed executive who compared the fee to "heroin for Adobe" because of how much revenue it brought in. Adobe said the quote was taken out of context.34 Either way, that is the kind of revenue disclosure rules are meant to put at risk.

Amazon's case points the same way. It agreed to pay $2.5 billion to settle FTC allegations about Prime enrollment and cancellation, including $1.5 billion in refunds, without admitting wrongdoing.2

The earnings math

No public company has said New York's rule will affect its results, and the coverage contains no company-specific estimates. Industry benchmarks do show why easier cancellation matters to subscription income. Private SaaS companies have reported a median of about 14% annual revenue churn.42 One analysis estimates that a 3% monthly churn rate compounds to about 31% a year.49 Small changes in cancellation rates can therefore move annual recurring revenue noticeably.

The effect will not be the same for everyone. Products that people actually use should see little change. Businesses that count on forgotten trials and hard-to-find cancel buttons are more exposed. One survey found that 70% of people had forgotten to cancel a free trial and ended up paying.10 Even so, a single city of roughly 8.5 million consumers will not show up in a national company's quarterly results.19 The real effect comes from stacking: city rules on top of state laws, on top of federal enforcement under the Restore Online Shoppers' Confidence Act, on top of card-network rules.2326

The restitution formula is also worth watching. Violators owe whatever they charged after the consumer's first attempt to cancel. That makes chat logs, call records and abandoned cancellation attempts central evidence.613 Skadden noted that each deceptive statement or omission can count as a separate violation, so total exposure can grow quickly for companies with many customers.12

A patchwork, not a pause

New York stepped in after the federal effort stalled. The FTC's 2024 click-to-cancel rule was vacated by the Eighth Circuit in July 2025 because the agency skipped a required preliminary analysis of costs and alternatives.21 The FTC reopened rulemaking with an advance notice in March 2026. Comments closed in April, and no replacement text had been published as of September.22 Skadden counts about 30 states with their own versions of these rules.12 DCWP Commissioner Samuel Levine, who led the FTC's consumer protection bureau during the federal rulemaking, has said he expects other cities to act before Washington does.13

Early numbers suggest demand. In the first few days, a few hundred complaints were filed and about 6,000 people visited the city's site, according to Levine. Complaints focused on gyms, streaming and smaller subscription services found on Instagram.8 New York Sports Club changed its cancellation process the day the rule took effect. Its marketing chief argued that easier exits make sign-ups easier too.8

The practical conclusion for software vendors: designing for the strictest jurisdiction is now cheaper than tracking each one separately. Davis+Gilbert recommends offering online cancellation to all subscribers nationwide for that reason.13 The company's own legal advisers would likely give the same advice.