S. 2253: Unsubscribe Act of 2025

This bill, titled the Unsubscribe Act of 2025, aims to enhance consumer protections related to negative options in contracts, particularly for services and products sold online. Here are the key provisions of the bill summarized in layman's terms:

Definition of Negative Options

A negative option is a type of agreement where if a consumer does not take action to cancel, they are deemed to agree or consent to ongoing charges for services or products. For instance, if a person subscribes to a service for free for a month but must cancel to avoid getting charged afterward, that is a negative option.

Disclosure Requirements

• Clear Disclosure: Merchants must disclose all important terms of the contract clearly before charging the customer.
• Express Informed Consent: Merchants must obtain the consumer's explicit agreement before charging them using negative options.

Contract Renewal Limitations

Merchants cannot automatically renew contracts for longer periods than the initial term without getting the consumer's consent again when the original term ends.

Cancellation Mechanisms

• For Online Contracts: Merchants must provide an easy way for consumers to cancel their agreements electronically, like a direct link to a cancellation form.
• For Non-Electronic Contracts: There must be a straightforward cancellation method, matching the way the consumer entered into the agreement.

Specific Requirements for Free-to-Pay Contracts

For contracts that allow consumers to try a product or service for free for a limited time before a charge takes effect, merchants must provide clear terms, including:

• The cost during the promotional period.
• The cost after the promotional period ends.
• The total costs expected throughout the contract's term.

Merchants must also notify consumers of any impending charges or price increases before the promotional period ends.

Ongoing Notification Requirements

Merchants are required to send notifications at regular intervals while the contract is active, giving updates on the terms and a reminder of how to cancel.

Enforcement Provisions

• Federal Trade Commission (FTC): The FTC is authorized to enforce the regulations outlined in this bill, treating violations as unfair or deceptive acts.
• State Enforcement: States can take legal action if they believe residents are affected by violations of this act.

Preemption of State Laws

This bill does not override state laws that provide greater protections to consumers than those offered at the federal level.

Definitions

The bill provides specific definitions for key terms, including:

• Merchant of Record: The individual or company responsible for the financial agreement with the consumer.
• Free-to-Pay Conversion Contract: A contract where consumers start with free service and may be charged later.
• Automatic Renewal Contract: A contract that renews automatically unless canceled by the consumer.

Effective Date

The provisions of this bill will take effect one year after its enactment.

Relevant Companies

• AMZN (Amazon): May be impacted due to its subscription services and digital content offerings, requiring adherence to new cancellation and notification standards.
• NFLX (Netflix): Could face operational changes regarding how it manages subscriptions and informs customers about billing and renewals.
• GOOGL (Alphabet): Its ad services and any subscription-based products may need to revise their terms to comply with new consent requirements.