Major Change Coming To NYC Gym Memberships And Subscription Services

NEW YORK, NY— New York City consumers could soon see changes to how they cancel subscriptions and how businesses disclose fees, but the City's ability to enforce those protections will depend on staffing, investigations and consumer complaints.

Lorelei Salas, former New York City Department of Consumer and Worker Protection commissioner, said the City's new Click-to-Cancel rule and proposed junk fees regulations address different problems that often overlap.

Subscribe

"They're separate, but they're not disconnected," Salas said.

Mayor Zohran Mamdani said the measures target hidden fees and recurring charges that cost consumers money long after they stop using a service.

"For years, companies have built their business model around making it harder for working people to hold onto their money," Mamdani said. "If you can sign up with one click, you can cancel with one click."

The City estimates the Click-To-Cancel rule alone could save New Yorkers up to $162.5 million each year, effective after Oct. 1.

The proposed junk fee rule would require businesses to display the total price a customer will pay before checkout, including mandatory service charges, processing fees and similar costs.

Companies that violate the rule could face consumer restitution and civil penalties beginning at $525 for each violation.

The proposal follows an executive order directing the Department of Consumer and Worker Protection to crack down on hidden fees across industries.

Would Cancellation Fees Still Be Allowed?

Salas, who led the agency for five years and later served as supervision director at the Consumer Financial Protection Bureau, said the rule focuses on how consumers cancel subscriptions, not necessarily whether companies may charge cancellation fees.

Whether a fee remains legal depends on how it is disclosed and whether regulators ultimately determine it is fair under the City's proposed junk fees rules.

"You could have a fee that is fully disclosed and it's clear and it's not hidden in fine print," Salas said. "That could be a lawful fee."

The proposed junk fees regulations would also examine whether certain charges are proportional to the actual cost of providing the service.

"Does it really cost them $45 to take the time to cancel a subscription?" Salas said. "Or is this amount completely disproportional?"

Are National Companies Affected By The Rule?

Yes, they can be.

The City's Click-to-Cancel rule is not limited to businesses headquartered in New York City.

Companies that market products or services to New York City consumers could still be subject to the rule, even if they operate elsewhere.

"As long as they're marketing and engaging with New York City consumers, I think that they'll be covered by the rule," Salas said.

Do I Have To Cancel My Gym Membership In Person?

Not necessarily.

Under the city's Click-to-Cancel rule, consumers who signed up for a recurring subscription in person could also be given an online way to cancel, such as through a website or email.

For example, if you joined a gym at the front desk, the business may no longer be able to require you to return in person just to end your membership if the rule applies.

"The gym must also provide me with the option to cancel via email or via a website," Salas said.

The rule is designed to make canceling a subscription at least as easy as signing up for one.

How Would New York Enforce The Rules?

The Department of Consumer and Worker Protection would investigate complaints against businesses serving New York City consumers, including companies based outside the city.

"As long as they're marketing and engaging with New York City consumers, I think it's fair that they'll be covered by the rule," Salas said.

Still, Salas said enforcement will require more than legal authority.

"I would worry more about the agency having the technical staff that will be able to help in those kinds of investigations," she said, noting that many subscription services operate through complex online systems.

What Are The Biggest Challenges?

Salas identified three major hurdles.

The first is resources.

"They're never going to have the resources to really look at the entire industry," she said.

The second is that consumers cannot currently bring lawsuits under the City's consumer protection law to enforce these rules themselves.

"If the agency cannot get to my case, then I can go to court myself and benefit from this rule," Salas said, explaining that she believes the law should eventually include a private right of action.

The third challenge is transparency.

Salas said a public complaint portal could encourage companies to fix problems before enforcement actions become necessary.

"If companies have an incentive to comply before there's an investigation, then it's better," she said. "It's better for the business. It's better for the consumers who are protected, and it's better for the agency."