Membership Site? Here’s the Legal Rule You Can’t Ignore
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. I am not a lawyer. Please consult with a qualified attorney to ensure your business is compliant with all applicable laws in your location and industry.
Note: Some of these links are affiliate links, which means I may receive a commission if you purchase through them. However, none of the fees have been increased to compensate me, and I only recommend tools that I've personally vetted or that my students consistently see success with.
Running a membership site or subscription-based product is one of the smartest ways to build recurring revenue as a digital creator. Whether you offer monthly templates, weekly coaching, or access to a private community, subscriptions can be the foundation of a sustainable business.
But there’s one thing many creators don’t think about until it’s too late:
The legal side.
Membership models come with a unique set of legal requirements, especially when it comes to how you handle sign-ups, cancellations, and refunds. The FTC is cracking down on shady practices, and there’s a new rule you need to know about: Click to Cancel.
In this post, we’re breaking down the must-know legal rules for anyone running a paid membership or subscription product online.
What Is the “Click to Cancel” Rule?
In 2024, the Federal Trade Commission (FTC) proposed an update to its rules around recurring subscriptions. The goal is simple: make it just as easy to cancel a subscription as it is to start one.
This is called the Click to Cancel rule, and while it’s not fully finalized yet, the message is clear — your membership cancellation process needs to be:
Easy to find
Easy to use
Not full of hoops or hidden steps
That means:
No requiring people to email you to cancel
No making them call a phone number
No forcing them to click through multiple pages just to find the cancel button
If your checkout or account dashboard makes it hard to cancel, you could be flagged for non-compliance under FTC rules on subscriptions.
What You Need to Do as a Membership Owner
Make cancellation simple and obvious
If you're using a platform like ThriveCart, Kajabi, or Teachable, make sure your customer portal allows members to cancel on their own with just a click or two.Give immediate confirmation of cancellation
Once someone cancels, they should get a confirmation email or page that clearly states their membership has ended or when it will expire.Avoid manipulative language
Don’t use guilt-tripping pop-ups or confusing messaging like “Are you sure you want to cancel your access to this amazing community?”
You’re allowed to offer a bonus or discount to stay — but it must be optional and clearly worded.
How This Applies to Subscription Products Too
If you sell:
Monthly template packs
Quarterly digital bundles
Weekly content drops
Software or tool access
Any auto-renewing digital product
These rules apply to you too. Even if your product is completely digital and “non-refundable,” you still need a clear cancellation process and written terms.
Refund Policies: Set Expectations Up Front
Your refund policy matters more than ever — not just for good customer experience, but for legal protection too.
Here’s what your refund policy should include:
Whether refunds are allowed (and under what conditions)
How long someone has to request a refund
How refunds are processed (credit, original payment method, etc.)
What is non-refundable (example: digital downloads or first month of access)
Post your refund policy in three places:
On your checkout page
Inside your terms of service
In your confirmation email
If you offer free trials that convert into paid subscriptions, you must disclose exactly when the trial ends and when the customer will be charged. This is a major area of concern under FTC subscription rules.
Terms of Service: What to Include for Memberships
Your terms of service are your contract with the customer. For a membership, you should include:
Billing frequency and price
How and when the subscription renews
Cancellation policy and how to cancel
Refund policy
Access limitations (for example, if content disappears after cancellation)
Use plain language and avoid burying this info in tiny print. You can link to your full terms but it’s helpful to include a short summary at checkout as well.
What Happens If You Don’t Follow the Rules?
In the past, smaller businesses may have gotten away with clunky or unclear cancellation systems. But with new enforcement in place, the risk is much higher now.
Consequences can include:
Chargebacks and disputes from frustrated customers
Legal notices from the FTC
Forced refunds and loss of access to your payment processor
Damaged trust and negative reviews that hurt your brand
Even if your membership is small, these issues can grow fast if you don’t set things up the right way.
A Few Tools That Make Compliance Easier
Depending on what platform you’re using, some tools make it easier to stay compliant:
ThriveCart and Kajabi: Both allow user dashboards with self-cancel options
PayPal and Stripe: Let customers cancel recurring subscriptions via their own account
Kit Commerce, Podia, and Gumroad: Let you customize cancellation emails and set clear refund policies
Before you launch or scale your membership, take time to test the cancellation flow from the customer’s perspective. If it’s hard or unclear, fix it now.
Final Thoughts
Membership sites and subscription-based offers can be incredible for building monthly revenue, deepening customer relationships, and creating long-term value. But they also come with legal responsibilities you can’t afford to ignore.
As consumer protection standards tighten, the businesses that survive and thrive will be the ones that:
Make cancellation easy
Are transparent about billing and refunds
Use clear terms that respect their members
It’s not about giving up control — it’s about creating trust, reducing disputes, and building a business that works long-term.
