FTC Issues “Click to Cancel” Final Rule: Key Considerations for the Fitness Industry

The Federal Trade Commission (FTC) has introduced its long-awaited “Click to Cancel” rule, aimed at simplifying the process for consumers to cancel recurring subscriptions, such as gym memberships. While the ruling brings some challenges for fitness businesses, industry leaders, particularly the Health & Fitness Association (HFA), acknowledge key victories that mitigate the potential impact on gym operations.

Overview of the Rule

The “Click to Cancel” rule mandates that businesses offering goods or services with recurring payments provide a cancellation process as straightforward as the sign-up process. This includes allowing consumers to cancel through the same medium used to enroll, without facing unnecessary steps or costs. Key requirements include clear disclosures of all material terms, such as recurring charges and deadlines, as well as obtaining explicit, informed consent, which must be documented for at least three years.

Key HFA Wins for the Industry

The HFA played a pivotal role in shaping the final rule, advocating for the unique needs of the fitness sector. Here are some significant outcomes that reflect their influence:

1. Removal of Annual Reminder Requirements
   The FTC initially proposed annual reminders for long-term memberships. However, the final rule dropped this requirement, addressing HFA concerns about the administrative burden it would place on fitness facilities, especially smaller operators.

2. Permitted Pre-Cancellation “Save” Attempts
   Fitness facilities can now offer options like membership pauses or tier adjustments during cancellation requests, as long as these do not impede the consumer's ability to cancel. This change recognizes standard customer service practices in the industry.

3. Acknowledgment of Security Needs
   While maintaining the "Click to Cancel" requirement, the FTC acknowledged the importance of security measures in the cancellation process. Gyms can implement reasonable safeguards while still ensuring cancellation methods are as simple as those used for sign-up.

4. Clarity on Negative Option Features
   The FTC expanded the rule to cover various negative option marketing practices while recognizing the distinct operational realities of gyms. The final rule clarifies the distinction between in-person memberships and purely online subscriptions.

5. Differentiation Between Free Trials and Memberships
   The rule clarifies that fitness facilities typically offer money-back guarantees rather than free trials, ensuring that gyms are not subject to stringent regulations meant for digital subscriptions.

6. Consideration for Small Businesses
   The FTC acknowledged the potential disproportionate impact on small fitness businesses, which often operate on tight margins. The removal of certain requirements and the introduction of flexible compliance measures reflect HFA's advocacy for small business protections.

What Fitness Facilities Need to Know

The finalized rule will take effect 180 days after being entered into the federal register, providing fitness facilities time to adjust to this new regulatory environment. 

The FTC's "Click to Cancel" rule introduces new challenges for fitness businesses but also provides important concessions thanks to the HFA's advocacy. Understanding and preparing for these changes will allow studios to continue to foster positive relationships with their members while navigating the evolving regulatory landscape.

Review all the key details from HFA to make sure your fitness studio is well-informed and ready to adapt to these new rulings.