New York City adopts “Click-to-Cancel” rule and proposes junk fee regulations

New York City has recently taken two notable consumer-protection regulatory actions through the Department of Consumer and Worker Protection (DCWP). These developments – a newly adopted “Click-to-Cancel” rule governing subscription cancellations and a proposed “Junk Fee” rule addressing fee disclosures in advertised prices – may affect billing, advertising, and subscription practices for companies operating in or marketing to consumers in the city. In doing so, New York City joins a number of state and local jurisdictions that have adopted regulatory measures affecting online commerce. According to the city, the “Click-to-Cancel” rule is the first municipal rule of its kind in the United States.

This alert explores the regulatory actions and their potential implications for companies.

Click-to-Cancel rule

On July 10, 2026, the DCWP announced the adoption of the final Click-to-Cancel rule, which takes effect on October 1, 2026. The rule requires any company making a subscription or automatic renewal offer to a consumer to clearly and conspicuously present all material terms – including product description, cost, frequency of charges, cancellation deadlines, and available cancellation mechanisms – before requesting consent or billing information. If the offer includes a free trial or temporary price, the company must explain how and when the price will change. 

The Click-to-Cancel rule mandates that companies provide consumers with a straightforward cancellation mechanism that is at least as easy to use and available through the same medium as the method used to subscribe. Companies must also offer cancellation through all mediums by which they accept consent. The rule prohibits obstructing, unreasonably delaying, or refusing to acknowledge cancellation requests and expressly bars tactics such as hanging up on consumers, providing false information about cancellation procedures, or misrepresenting the consequences of cancellation. 

While companies may present retention offers or information about the effects of cancellation, they may not do so in a manner that obstructs or delays the consumer’s ability to cancel. The rule also requires notices to consumers of:

• No fewer than 15 days and no more than 45 days before the onset of renewal charges on subscriptions of one year or more
  
  
• No fewer than five days and no more than 30 days before material changes, such as price increases 
  
  
• No fewer than three days and no more than 21 days before the cancellation deadline following a free trial exceeding one month

A company found to have violated the Click-to-Cancel rule is liable for restitution in the amount charged after a consumer’s first cancellation attempt, in addition to civil penalties escalating from $525 for a first violation to $3,500 for third and subsequent violations. Each individual statement, description, or omission that constitutes a deceptive trade practice gives rise to a distinct and independent violation, meaning that, for a significant campaign, the civil penalties under the rule may be substantial. Certain categories of companies are exempt, including entities regulated by the New York State Department of Financial Services, banks and credit unions, security alarm operators licensed by the New York Department of State, and sellers of service contracts under the New York Insurance Law. 

The Click-to-Cancel rule’s core substantive disclosure and cancellation requirements largely mirror New York’s existing statewide automatic-renewal statute, GBL § 527-a. Limited deviations include requiring an online cancellation mechanism for in-person enrollments, where state law also permits a telephone option. A key practical change is not the creation of new substantive obligations, but the addition of an independent municipal enforcement and penalty regime. The Click-to-Cancel rule gives DCWP direct citywide enforcement authority and imposes a higher, uncapped per-violation penalty schedule of $525 to $3,500. As a result, companies already following Section 527-a may not face substantial new compliance burdens, but they will now face a second enforcement body with greater potential penalty exposure for large-scale violations.

The Click-to-Cancel rule addresses an area that has also been the subject of recent federal regulatory efforts. Although the Federal Trade Commission (FTC) finalized its own version of the Click-to-Cancel rule in October of 2024, the rule was ultimately vacated by the US Court of Appeals for the Eighth Circuit in July 2025. That court decision was followed by a renewed effort by the FTC in the winter and spring of 2026 to regulate negative options. Although the FTC has announced a rulemaking and is currently seeking public comment, it has not indicated a timeline for when a final rule may be issued or what requirements it may include.

Proposed Junk Fee rule

DCWP has separately proposed a rule that would make it a deceptive and unconscionable trade practice to advertise or display the price of a good or service without disclosing the “total price,” defined as the maximum total of all mandatory fees and charges (excluding government-imposed taxes and reasonable actual shipping costs). The rule would require that the total price be presented at least as prominently as any other pricing information. Additionally, before a consumer consents to pay, the company must provide a full breakdown of any fees excluded from the total price – such as optional add-ons, shipping, or taxes – and disclose the final amount due. The public hearing on this proposed rule is scheduled for 11:00am ET on August 7, 2026, and written comments must be submitted on or before that date. 

The proposed Junk Fee rule is industry-neutral and applies broadly to any person who offers, displays, or advertises goods or services in New York City or to a New York City consumer, except where preempted by federal or state law. It defines “mandatory fees” to include fees that are not reasonably avoidable by the consumer and fees for aspects of a good or service that a reasonable person would expect to be included in the purchase. As proposed, the definition could apply where a company characterizes an essential component of a good or service as “optional” in order to display a lower price. The rule would also prohibit misrepresenting the nature, purpose, amount, or refundability of any fee. Companies would be required to maintain records sufficient to establish the basis for each fee and produce them upon DCWP request, with a failure to do so creating a presumption that facts alleged by the Department are true. Penalties mirror the Click-to-Cancel rule, ranging from $525 to $3,500 per violation. 

Potential impacts on companies 

Together, these regulatory actions reflect New York City’s focus on subscription practices and price transparency. Companies that operate subscription models may wish to review their sign-up flows, cancellation processes, and renewal notification practices in light of the Click-to-Cancel rule’s October 1, 2026 effective date. Companies that advertise goods or services in New York City are encouraged to monitor the progress of the Junk Fee rule, particularly if they rely on pricing structures that separate mandatory fees from the base advertised price. Written comments on the proposal are due by August 7, 2026. Both rules provide for per-violation penalties that may accumulate for companies with large consumer bases, and the proposed Junk Fee rule would require companies to maintain evidence supporting the basis for any fee included in the total price.