New York just made the call-sales-to-cancel button a $3,500 liability

Most self-serve software I have paid for has a page that nobody in marketing likes to discuss. It is the cancellation flow. You can buy the monthly plan with a card and a personal email in a couple of clicks, and you can only leave by booking a call with someone whose bonus depends on you staying. Since 1 October 2026, if that customer is a New York City consumer, that page can cost the vendor $525 for a first violation and up to $3,500 for repeats, per violation. Lawyers reading the rule say each misleading statement or omission can count separately, and that refunds can be measured from the customer's first attempt to cancel.

The rule from the city's Department of Consumer and Worker Protection is short. Subscription terms have to be disclosed clearly. Customers have to be told about auto-renewal and about changes to their terms. Cancellation has to work through the same method as sign-up, so a product sold online cannot force the customer onto the phone. The scope includes software seats sold to consumers, in a city of roughly 8.5 million of them.

I expected a gym story, and the enforcement history supports that reading. The department sent warning notices to 187 gyms and health clubs earlier this year, and it began rulemaking after more than 100 cancellation complaints in 2025. What changed my mind was the man running the department. Commissioner Samuel Levine led the FTC's Bureau of Consumer Protection during its own click-to-cancel rulemaking, and he has said he expects more municipalities to act before the federal government does. He has reason to think so. The Eighth Circuit vacated the FTC's rule on procedural grounds on 8 July 2025, and WilmerHale's lawyers think the current FTC is unlikely to appeal or reissue it. So the rule Levine could not get through Washington is now being rebuilt in New York, and I think he intends it as a template.

For vendors, a patchwork is more expensive than a single federal rule. Nobody I know builds a separate cancel button for each jurisdiction. You build one honest flow and ship it to everyone, or you keep the phone gate and bet that your lawyers can tell, account by account, who counts as a consumer in which city. Once one large market forces the honest flow, I expect the friction-dependent revenue elsewhere to start leaking too, because the engineering work is already done and the retention team has lost its cover.

B2B sellers will reply that none of this applies to them, and for part of the market they are right. Kilpatrick notes that New York's consumer protection law has historically applied to consumer-facing transactions, and the rule does not say whether it reaches business subscriptions. A compliance guide on California's AB 2863, in force since 1 July 2025, says ordinary vendor contracts for SaaS, leases and insurance are governed by contract law rather than that statute. If you sell annual enterprise deals on signed order forms, New York is probably not your problem this year.

That comfort covers less of the market than founders assume. Colorado's amended automatic renewal law explicitly covers business-to-business subscriptions, effective 16 February 2026, so the B2B exemption has already broken in one state. And product-led software blurs the consumer line on purpose. The freelancer paying on a personal card, the team lead who expenses five seats, the small agency on a monthly plan: these buyers signed up through the same form as a hobbyist, and the vendor usually cannot prove which ones are businesses. If a city regulator decides they look like consumers, the vendor argues the point while fines stack up per omission and restitution runs back to the first cancellation attempt.

The commercial argument matters more to me than the legal one. A customer who asked to leave and was held only because the exit required a phone call is a delayed churn number with a complaint attached, and I think any retention figure that counts them is overstated. Acquirers doing diligence and investors pricing recurring revenue have every reason to start asking how much of a company's renewal base sits behind a gate. Procurement leads have a fresh lever as well: ask vendors to demonstrate cancellation through the same channel as purchase before you sign, and cite New York when they hesitate.

Before your next board meeting, pull every account that started a cancellation in the past twelve months and stayed only after a call, a chat with a retention agent or a second form, and recompute gross retention with those accounts counted as lost. Then filter that list for New York billing addresses on self-serve plans, because those accounts are exposed to the city's fines today.

Prompted by Click to Cancel - nyc.gov, nyc.gov.