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Recurring Billing Requirements

TL;DR
  • Disclose price, billing frequency and how to cancel before you ask for a card number. On the page, not buried in the terms.
  • Express consent, on a box that isn't pre-checked. Timestamp it. Keep the record 3+ years.
  • Reminder 7+ days before a free trial converts. Amount and date in it.
  • Signed up online means they cancel online. Same channel, no extra steps, no retention gauntlet.
  • The FTC's Click-to-Cancel Rule was vacated in July 2025. ROSCA didn't go anywhere. The FTC still enforces under it, so nothing practical changed.
  • California is the state that bites. Goods supplied without proper consent are an unconditional gift. The customer owes you nothing.

Most subscription chargebacks aren't fraud. They're a customer who forgot they subscribed. Or couldn't find the cancel button. Or didn't recognize the line on their statement. The compliance rules below are also the chargeback-prevention list. Getting compliant and cutting disputes is one project, not two.

Card Network Requirements​

Visa and Mastercard landed in the same place by different routes. Build to the stricter one and you're compliant with both. You'll also have removed most of what creates subscription disputes.

Visa Subscription Rules​

  • Get consent for the recurring charge at enrollment. On its own, separate from everything else.
  • It has to name the subscription terms. Not folded into a general terms-of-service click.
  • The box can't be pre-checked. Most common violation there is. One screenshot proves it.

Enhanced Notification at Enrollment​

Send the terms even if nothing gets charged at signup. It has to include:

  • Confirmation of the subscription agreement
  • Transaction amount and frequency
  • How and when it renews
  • Clear cancellation instructions
  • Merchant contact information

Free Trial Conversion​

Send a reminder at least 7 days before the first paid charge. It has to include:

  • Amount to be charged
  • Date of charge
  • How to cancel

Cancellation Requirements​

  • Online signup means online cancellation. No exceptions.
  • You can't demand a phone call or a letter if signup didn't need one.
  • "Simple" means few clicks and no friction bolted on to slow people down.
  • Send a cancellation confirmation. It's your best evidence on a 13.2.

Transaction Identification​

  • Use the right MCC for subscription services.
  • Put your actual brand name in the billing descriptor. See descriptors and communications.
  • Store credentials under Visa's stored-credential mandate.

Mastercard Subscription Rules​

Miss these and it comes back as a chargeback. Reason code 4853, Cardholder Dispute.

March 2022 Updates​

  • Confirmation email at enrollment, with all terms.
  • Payment receipt after each successful billing.
  • Cancellation instructions on every communication.

September 2022 Updates​

  • Billing reminders on plans with 180+ day intervals, 7-30 days ahead.
  • Negative option reminder before trial-to-paid conversion, 7+ days.
  • Enhanced consent requirements.

Cancellation​

  • The cancellation channel has to match the signup channel.
  • Online signup = online cancel required.
  • You can't add steps that weren't there at enrollment.

Federal Requirements​

ROSCA (Restore Online Shoppers' Confidence Act)​

ROSCA covers every internet subscription. Any product, any size. Three requirements:

1. Clear and Conspicuous Disclosure​

  • Every material term goes in front of them before you take billing info.
  • Not in the terms of service. Not in fine print.
  • Price, frequency and cancellation policy, at minimum.
  • Visible without scrolling past other content.
  • They have to do something affirmative. Passive acceptance isn't consent.
  • Consent to these recurring terms, not to your agreement generally.
  • Before any charge.
  • A separate mechanism from your other agreements.

3. Simple Cancellation Mechanism​

  • "Simple" isn't defined in the statute. That's deliberate.
  • Cancellation can't be meaningfully harder than signup was.
  • The FTC's cases draw the actual line. Read the enforcement history below.

FTC Click-to-Cancel Rule (Status)​

  • Finalized October 2024.
  • Vacated by the 8th Circuit in July 2025, on procedural grounds.
  • The FTC kept enforcing under ROSCA and FTC Act Section 5.
  • The dead rule still shows what the FTC thinks the law already requires.

Loosened your cancel flow when the rule got struck down? Put it back. The rule died on procedure, not substance. ROSCA is what the enforcement actions ran on anyway.

Still enforced under ROSCA:

  • Cancellation as easy as signup.
  • No forced conversation with a rep unless signup required one.
  • Clear disclosure of material terms.

Recent FTC Enforcement​

CompanyDateIssueOutcome
UberApril 2025Deceptive enrollment, difficult cancellationLitigation ongoing
Cleo AIMarch 2025Hidden subscription terms, cancellation barriersAction filed
Care.comAugust 2024Cancellation issues$8.5M settlement
AmazonOngoingDeceptive Prime enrollmentLitigation

Penalties: up to about $53,000 per violation under the FTC Act, on the 2025 civil penalty adjustments.

State Laws​

California Automatic Renewal Law (ARL)​

California is the strictest state. It's also the one that changes what you build. Sell to a California customer at all? Build to the ARL. Treat the other states as covered.

July 2025 Amendments (AB 2863)​

  • Express affirmative consent: on the renewal terms specifically.
  • Record retention: 3 years, or 1 year post-termination.
  • Cancellation medium: the same one they enrolled in.
  • Pre-enrollment disclosure: cost, frequency and cancel policy, next to the enrollment.
  • Annual reminders: on terms of 12 months or longer.
  • Price change notice: in advance.
  • One save rule: one retention offer during cancellation, then let them go.

Existing Requirements​

  • Clear and conspicuous disclosure of the renewal terms.
  • Affirmative consent to the agreement.
  • Acknowledgment with terms and cancellation info after signup.
  • Goods or services supplied without proper consent count as an unconditional gift. The customer keeps them and owes you nothing. A consent-record failure becomes a total loss on the sale.

Enforcement​

  • California AG and district attorneys.
  • Private plaintiffs, and class actions are common.
  • Significant statutory damages.

New York​

  • Clear disclosure of autorenewal terms before signup.
  • Easy cancellation mechanism required.
  • Civil penalties apply (NY General Business Law §527 et seq.).
  • The AG and local government both enforce it.

Colorado​

  • Renewal terms have to be disclosed.
  • Cancellation has to be available.
  • Enforcement activity is growing.

Other States with Auto-Renewal Laws​

20+ states regulate auto-renewal in some form:

  • District of Columbia
  • North Dakota
  • Vermont
  • Virginia
  • Illinois
  • Oregon
  • And others
State law is a moving target

State auto-renewal laws differ, and they change most legislative sessions. None of this is legal advice. For a small merchant the practical answer is simple. Build to California and stop tracking the rest. Big enough that a state AG would notice you? Get counsel who follows the states you sell into.

Implementation Checklist​

Pre-Enrollment​

  • Display price clearly (including post-trial price)
  • Show billing frequency (monthly, annual, etc.)
  • Explain trial period and conversion date
  • Provide cancellation instructions
  • Link to full terms of service
  • All disclosures "clear and conspicuous"
  • Disclosures in proximity to enrollment (not buried)

At Enrollment​

  • Capture express consent (checkbox, not pre-checked)
  • Separate consent for subscription vs. one-time purchase
  • Record timestamp and method of consent
  • Store consent record for 3+ years

Post-Enrollment Confirmation​

  • Send immediate confirmation email/text
  • Include all subscription terms
  • Repeat cancellation instructions
  • Provide customer service contact
  • Include transaction amount and frequency

Before Trial Conversion​

  • Send reminder 7+ days before first charge
  • Include specific charge amount
  • Include charge date
  • Include cancellation method
  • Make it easy to cancel from the reminder

Ongoing Communications​

  • Receipt after each successful charge
  • Cancellation instructions on every receipt
  • Price change notifications in advance
  • Annual reminders (California, 12+ month terms)

Cancellation Process​

  • Online cancel if online signup
  • Minimal clicks to complete
  • No forced upsells before confirmation
  • Immediate confirmation of cancellation
  • Clear effective date of cancellation
  • No penalties for cancellation (unless disclosed)

Chargeback Prevention for Subscriptions​

Common Subscription Chargeback Reasons​

ReasonRoot Cause
"I forgot about this subscription"Poor communication, no reminders
"Trial converted without my knowledge"Insufficient trial conversion notice
"I couldn't figure out how to cancel"Difficult cancellation process
"I don't recognize this charge"Unclear billing descriptor

Every row is a communication failure, not a fraud problem. Good news. You can fix all four without buying anything.

Prevention Strategies​

Clear Billing Descriptors:

  • Use the name they'd recognize, plus the word "subscription".
  • ACME*MONTHLY SUB, not PYMNT SVC 12345.
  • Legal entity in the descriptor, brand name on the storefront? They won't connect the two.

Pre-Charge Reminders:

  • 7+ days before trial conversion
  • Before annual renewals
  • When price changes

Easy Online Cancellation:

  • Self-service portal
  • Minimal clicks
  • Immediate confirmation

Proactive Customer Outreach:

  • Failed payment notifications
  • Usage reminders for unused subscriptions
  • Win-back offers before cancellation

Prevention Tools:

  • Ethoca and Verifi alerts
  • Order Insight / Consumer Clarity enrollment
  • Clear transaction enrichment data

Visa Reason Code 13.2​

13.2, Cancelled Recurring Transaction is what you get for billing someone after they asked you to stop. You also get it when they only think they asked. That's why the confirmation email beats your internal record.

To defend a 13.2, you need:

  • The date the request arrived, and the channel it came through.
  • Proof the charge covered a period before cancellation took effect.
  • The cancellation confirmation you sent, with its timestamp.
  • Your terms showing you bill through the end of the paid period.

If you can't produce the confirmation you sent them, you'll lose this one. Send the email, keep the email.

Record Retention Requirements​

Record TypeMinimum RetentionRequirement Source
Consent capture3 yearsCalifornia ARL
Transaction records2+ yearsPCI DSS, network rules
Cancellation confirmations2+ yearsBest practice for disputes
Customer communications1 year post-terminationCalifornia ARL
Terms of service versionsDuration of use + 2 yearsBest practice

Where This Breaks​

The consent record exists but you can't produce the screen. A boolean consent = true and a timestamp prove nothing about what the customer saw. Snapshot the enrollment screen, version it, tie each consent record to a version. Without that you can't rebut a California ARL claim. You can't win a 13.2 either.

Cancellation works, but only during business hours. A "cancel" link that opens a support ticket isn't online cancellation. A human approves it, so you've met neither the network rule nor ROSCA. The customer who tried at 11pm on a Sunday files a chargeback on Monday.

The trial reminder goes to the signup email nobody reads. Send it, then check the open rate. Under 20% and you have a compliant email nobody sees. That protects you legally and does nothing for your dispute rate. Add an in-product notice.

Your annual plan reminds nobody. Twelve months is long enough to forget you exist. California requires the reminder on 12+ month terms. It's the highest-yield email in a subscription business, whatever state they're in.

You updated the price and told them in the terms. A price change needs direct advance notice. Changing the number on your pricing page isn't notice. Those disputes are unwinnable.

Retention offers turn into a maze. One save attempt is defensible. California limits it to exactly that. Three screens of offers is what an FTC complaint looks like. It's also what an examiner screenshots.

High-Risk Considerations​

Processors price subscriptions as higher risk. They're not wrong. Expect it in your quote and don't take it personally:

  • Higher chargeback rates
  • Trial abuse
  • Customer complaints
  • Regulatory scrutiny
  • Negative option concerns

What to Expect​

  • Enhanced monitoring requirements
  • Possible reserves (rolling or upfront)
  • Stricter chargeback thresholds
  • Regular compliance audits
  • Higher processing rates

Mitigation Strategies​

  • Transparent pricing and terms
  • Easy cancellation process
  • Proactive customer communication
  • Strong consent documentation
  • Low chargeback ratios
  • Positive customer reviews

Step 1: Pre-Enrollment Disclosure​

Subscription Terms

You are enrolling in [Product Name] for $X.XX per month.

  • Your subscription will automatically renew each month
  • You will be charged $X.XX on the [date] of each month
  • You can cancel anytime at [website.com/cancel] or by calling [phone]
  • See our full [Terms of Service] for complete details

[ ] I agree to the subscription terms above. I understand I will be charged $X.XX per month until I cancel.

[Subscribe Now]

(Checkbox must not be pre-checked)

Step 3: Confirmation​

Subscription Confirmed

Thank you for subscribing to [Product Name]!

Subscription Details:

  • Amount: $X.XX per month
  • Next charge: [Date]
  • Renewal: Automatic monthly

To Cancel:

  • Online: [website.com/cancel]
  • Phone: [number]
  • Email: [email]

A confirmation email has been sent to [email address].

Verified August 2026

Subscription rules move faster than anything else on this site. The FTC's Click-to-Cancel Rule was vacated in July 2025. Enforcement carried on under ROSCA anyway. State laws change most sessions, California's especially. Check the current position before you make a compliance decision on the strength of this page.

Next Steps​

Setting up subscription billing?

  1. Follow implementation checklist - Pre, at, and post enrollment
  2. Review network rules - Visa and Mastercard requirements
  3. Design consent flow - Pre-enrollment to confirmation

Ensuring compliance?

  1. Meet ROSCA requirements - Federal rules
  2. Check California ARL - Strictest state law
  3. Set up record retention - 3+ year consent

Preventing subscription chargebacks?

  1. Identify root causes - Forgot, couldn't cancel
  2. Implement prevention strategies - Reminders, easy cancel
  3. Defend against 13.2 - Cancelled recurring disputes

See Also​

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