Why Coaches Must Update Their Payment Practices for 2025–2026
Collecting payment is one of the most exciting milestones in a coaching business — but it’s also one of the easiest places to accidentally break the law or expose yourself to chargebacks, misunderstandings, or angry clients.
Between changing Federal Trade Commission (FTC) rules, payment processor requirements, and new membership-cancellation laws, coaches must adopt modern payment practices that keep both revenue and reputation safe.
This guide breaks down the three biggest legal areas coaches must understand when accepting payments:
- Selling and taking payments over the phone
- Payment plans vs. memberships (and why clients get confused)
- Structuring payment plans without violating lending laws
This is part of my Selling Legally series, and the next installment covers exactly what must be on your order forms — so stay tuned for that one.
Tip #1: How to Take Payment Over the Phone Legally
Selling on the phone is incredibly effective. You build rapport, answer objections, and support a potential client through the decision-making moment.
But phone sales come with one major legal gap:
You have no record proving the client saw your contract before paying.
And if a client later says:
- “I never saw the contract,”
- “I didn’t agree to these terms,” or
- “I would not have paid if I knew about the no-refund policy…”
…they can file a chargeback and win — even if you did everything right.
The solution: Record a short portion of the call (with permission)
This is simple, natural, and takes 60 seconds.
You only need to record the section where you confirm the key terms:
- what the program includes
- how long the client gets access
- the price
- any bonuses
- refund or no-refund policy
- that they understand and agree
A sample script:
“Is it okay with you if I record this portion of our call so we both have a record of what we discussed before you join?”
99% of clients say yes because it protects them too.
Once confirmed, you walk them through the basics, stop the recording, and then collect payment.
The non-negotiable rule:
Never write down a credit card number.
Never type it into your Notes app, never jot it on a sticky note.
The credit card must be entered directly into:
- a Stripe invoice page
- a Kajabi checkout
- your CRM’s encrypted payment field
This is required by:
- the law
- your payment processor
- your PCI compliance obligations
If you violate this rule, your processor can shut down your account instantly.
Tip #2: The Legal Difference Between Memberships and Payment Plans
This is one of the biggest sources of legal drama in coaching.
Memberships = cancel anytime
If you offer a true membership (such as a monthly subscription), you must:
- make cancellation simple
- provide a monitored email for cancellation
- not require phone calls, forms, or hoops
- avoid punitive cancellation policies
And while it’s not legally required to refund someone who “didn’t mean for it to renew,” many coaches choose to offer a 24–48 hour grace period as a goodwill policy.
Payment plans = NOT cancel anytime
A payment plan is simply a way to pay for a program over time.
It is not a membership.
It is not a subscription.
It is not pay-as-you-go.
When someone joins a coaching container on a payment plan, they are responsible for the full agreement, not the months they choose to participate.
But customers routinely misunderstand this, which is why you must be explicit:
“This is a payment plan, not a membership. By enrolling, you are committing to the full investment.”
This one sentence can prevent countless chargebacks.
Tip #3: How to Structure Your Payment Plans Without Violating Lending Laws
If you structure payment plans incorrectly, you could be treated as if you are providing “credit” or “financing,” which opens the door to a whole set of lending laws you absolutely do not want to get tangled with.
Here’s how to avoid that.
1. Never charge a “financing fee.”
Instead, you present the pricing like this:
“The full price of the program is 12 monthly payments of $149.
You can also receive a pay-in-full discount of two months free.”
You’re not adding interest.
You’re offering a discount.
And that’s legally compliant.
2. Keep the payment plan shorter than the program
If your program is 12 weeks long, don’t offer a 6-month payment plan.
The longer the payment plan extends past the delivery window, the higher the payment risk and the greater the client dissatisfaction.
3. Consider using third-party financing platforms
To avoid being the “lender,” let a third-party handle financing when possible:
- Affirm
- Klarna
- ShopPay
- AfterPay
If you’re using an all-in-one platform like Kajabi, these options may already be integrated into your checkout at no additional cost.
This allows you to get paid in full while the client pays over time.
Why All of This Matters for Coaching Businesses
Legal compliance is one reason.
Chargeback protection is another.
But here’s the real reason:
Reputation.
The coaching industry is smaller than it looks.
A frustrated client can:
- go to the bank
- go to social media
- go to their peers
- go to the FTC
- leave harmful reviews
And almost all of that stems from frustration around payments, expectations, or access.
Transparent, modern, compliant payment practices protect your:
- paycheck
- brand
- reputation
- emotional bandwidth
Happy clients don’t create legal drama.
Unhappy clients do.
What’s Coming Up Next in the Series
This video is part of a multi-part training on selling legally.
Up next:
How to Collect Payment on Order Forms (Legally, and Without Breaking FTC Rules)
You won’t want to miss that one.
Want the Legal Documents That Make This Easy?
Inside my free course Legal in a Weekend, you get:
- a privacy policy
- terms & conditions
- your disclaimer
- your order form requirements
- your client agreement checklist
Everything you need to sell your coaching program safely and confidently.
