Plain-language definitions of every subscription billing and consumer rights term you need to know. Bookmark this page for reference when dealing with stubborn companies.
A billing practice where a subscription automatically charges you for the next period (month or year) unless you cancel before the renewal date. Companies are required by the FTC Click-to-Cancel Rule to clearly disclose auto-renewal terms before you sign up and make cancellation as easy as enrollment.
A marketing arrangement where your silence or failure to act is treated as consent to be billed. Free trials that convert to paid subscriptions are the most common form. The FTC's Negative Option Rule requires sellers to clearly disclose the terms and obtain your express informed consent before charging.
A federal regulation (16 CFR Part 425, updated 2024) requiring companies to make cancellation as easy as signup. If you subscribed online with one click, the company must let you cancel online with the same ease. Companies that require phone calls, in-person visits, or confusing multi-step processes to cancel are violating federal law.
The Restore Online Shoppers' Confidence Act (15 USC Section 8403) is a federal law that prohibits charging consumers for online goods or services through negative option features unless the seller clearly discloses all material terms, obtains express informed consent, and provides a simple way to stop recurring charges.
Deceptive user interface designs that trick consumers into unintended actions, such as making the cancel button nearly invisible, burying cancellation in confusing menus, or using guilt-tripping language to discourage cancellation. The FTC considers dark patterns a violation of Section 5 of the FTC Act and has taken enforcement action against companies like Adobe for using them.
A subscription you forgot about that continues to charge your card month after month. The average American has 3-4 zombie subscriptions costing $348 per year in wasted spending. Common culprits include free trials that converted, services you stopped using, and subscriptions tied to old email addresses.
A marketing tactic where a free trial requires a credit card upfront and automatically converts to a paid subscription if you forget to cancel. Many companies use dark patterns to make the trial-to-paid conversion hard to notice. Under the FTC Negative Option Rule, companies must clearly disclose when a free trial will convert to a paid subscription and send a reminder before charging.
A reversal of a credit card charge initiated by the cardholder through their bank or card issuer. Under the Fair Credit Billing Act (FCBA), you have 60 days from the statement date to dispute unauthorized or incorrect charges. Chargebacks are a powerful tool when a company continues to charge you after you have canceled or refuses to process a refund.
Any charge that repeats on a regular schedule (weekly, monthly, quarterly, or annually) without requiring you to re-authorize each payment. Recurring charges are the backbone of the subscription economy. Under federal and state law, companies must get your express consent before initiating recurring charges and disclose the amount, frequency, and cancellation terms upfront.
A charge imposed by a company when you cancel a subscription before an agreed-upon commitment period ends. Adobe Creative Cloud, for example, charges 50% of the remaining contract value as an early termination fee on annual plans. Several states restrict or prohibit cancellation fees for certain types of services, particularly gym memberships.
A penalty charged when you end a contract-based subscription before its term expires. Common in gym memberships, phone plans, and software annual plans. Many state consumer protection laws cap or prohibit early termination fees, especially for health club memberships. The FTC Click-to-Cancel Rule may also apply if the fee was not clearly disclosed at signup.
A partial refund calculated based on the unused portion of your billing period. For example, if you cancel halfway through a month you paid for, a pro-rated refund would return half the monthly fee. Most subscription services do not offer pro-rated refunds, instead letting you keep access until the end of the billing period. Some state auto-renewal laws require pro-rated refunds when proper disclosure was not made.
The recurring time period between subscription charges, typically monthly or annually. Understanding your billing cycle is critical for timing cancellations to avoid being charged for the next period. Most services require cancellation before the billing cycle renewal date, and once charged, access typically continues until the end of the current cycle without a refund.
A state-level statute that regulates automatic subscription renewals. As of 2026, 14 states and Washington D.C. have specific auto-renewal laws requiring clear disclosure, affirmative consent, easy cancellation, and confirmation notices. California's Automatic Renewal Law (ARL) is the strongest, allowing consumers to recover full refunds if terms were not properly disclosed.
The Electronic Fund Transfer Act (15 USC Section 1693) is a federal law that protects consumers who use electronic payment methods including debit cards, ACH transfers, and direct withdrawals. Under EFTA, you can stop pre-authorized recurring payments by notifying your bank at least 3 business days before the scheduled transfer. Your bank must comply with your stop-payment order even if the merchant disagrees.
A systematic review of all recurring charges across your bank accounts, credit cards, and digital wallets to identify forgotten subscriptions, unauthorized charges, price increases, and duplicate payments. The average subscription audit uncovers $348 per year in wasted spending. SubScrub automates this process by scanning your uploaded statements with AI.
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