FTC’s “Click to Cancel” Rule: What nonprofits need to know

Molly Kelly, President, Digital Solutions

The Federal Trade Commission (FTC) recently released new regulations called “Click to Cancel” that will go into effect on May 14. While this rule is primarily aimed at commercial companies, we’re advising nonprofits to use this as a moment to review your recurring donation best practices and reinforce trust with donors.

At Zuri Group, we advise our clients on the latest rules, regulations and fundraising trends. That’s why we’re sharing more insight about what this new FTC rule means for you, how it might influence online donor behavior and what you can do now to prepare your program. 

What is the new rule?

The FTC “Click to Cancel” policy is a rule concerning recurring subscriptions and other negative option plans. It aims to make it as easy for consumers to cancel recurring subscriptions and memberships as it is to sign up for them. For example, if a consumer signed up online with a click, they should be able to cancel online with a similar ease – a “click to cancel.”

Will it impact nonprofits?

While still up for debate, most agree that the FTC jurisdiction would not require nonprofit organizations to comply with these new rules. However, there are ongoing discussions around how this might influence the digital industry at large, including nonprofit organizations. 

Will it change donor behavior?

Donors are consumers and will become accustomed to the ease of managing their recurring payments with one click. As with other technologies, they will begin to expect similar behavior from the nonprofit organizations they support.

Adopting the principles of the “Click to Cancel” rule – easy cancellation, clear disclosures and explicit consent – could actually benefit nonprofits by building greater trust with donors. Donors might feel more comfortable setting up recurring donations if they know they can easily stop them without hassle.

What can you do now to prepare?

While these steps aren’t required for nonprofits yet, this is a good time to review your donor experience and the way your organization handles cancellation requests. 

1: Transparent Disclosures

• Share the terms of a recurring donation with users at the time of sign-up, including the monthly donation amount and frequency. Make clear that the donation will continue until canceled.
• Provide clear information on how a donor can manage or cancel their recurring gift in your donation receipt. 

2: Clear Sign-Up

• Under the new rule, companies must document explicitly that users consented to the terms of the recurring payment. They need to obtain clear, documented proof of consent for three years in case of compliance disputes. 
• Some nonprofits are mitigating this risk by including an additional checkbox to the donation process. While adding an additional step goes against fundraising instincts, they have found this to be a simple approach.

3: Simple Cancellation Process

• “Click to Cancel” wants to ensure that canceling a recurring payment or subscription is as easy as setting it up. Companies must provide a way to cancel the payment in the channel that it was made. 
• For nonprofit organizations, we recommend making your recurring donation cancellation process simple and easy to locate. Avoid making donors navigate multiple steps or menus to end their recurring gift. If you have a donor portal, provide the new donor with the information to access and cancel the gift. If you do not have a portal, consider providing an easy-to-find link that directs to a form to capture any requests and route to your team for a quick resolution.

While the FTC’s “Click to Cancel” rule doesn’t directly apply to nonprofit donations, it’s likely to influence donor expectations and potentially shape best practices within the nonprofit sector. Organizations that prioritize transparency and make it easy for donors to manage their recurring contributions may find it strengthens donor trust and long-term relationships.

If you have questions about how to set your program up for long-term success or navigate new rules like “Click to Cancel,” reach out to our team today at molly@zurigroup.com.