A federal appeals court has blocked the anticipated click-to-cancel rule of the United States Federal Trade Commission mere days before its scheduled enforcement. This ruling was set to take effect on 14 July 2025, and it was aimed at making it easier for consumers to cancel subscriptions online to match the simplicity of the original sign-up process.
Click-to-Cancel Rule Blocked Legal Setback for FTC as Federal Appeals Court Rejects Subscription Cancellation Rule
Click-to-Cancel Rule
The Eighth Circuit Court of Appeals ruled that the FTC failed to conform to the procedural requirements under the FTC Act. It specifically found that the agency underestimated the economic impact of the rule, which likely exceeded the USD 100 million threshold, requiring a more thorough regulatory analysis that the FTC did not perform.
Note that the proposed rule sought to curb practices known as “negative option marketing,” in which companies make it difficult for consumers to cancel recurring charges. These include tactics like forcing customers into lengthy chat sessions, obscuring cancellation options, or creating confusing interfaces designed to deter users from unsubscribing.
The FTC argued that the rule would modernize consumer protections first introduced in 1973 and address a rising number of consumer complaints. It added that its office received roughly 70 complaints per day concerning deceptive or obstructive subscription cancellation practices in 2024 alone. This prompted the agency to prioritize the issue.
However, several companies challenged the rule in court and argued that the process observed by the FTC was flawed and that they were unfairly prejudiced. The court agreed, determining that the absence of a proper cost-benefit analysis rendered the rule invalid. Consequently, the entire regulation was vacated pending further action by the FTC.
Reactions and Related Developments
Consumer advocacy groups expressed discontent. They called the ruling a setback for transparency and consumer rights. Several businesses, meanwhile, viewed the decision as a victory against what they considered overreach by the federal government. The debate over subscription transparency is now expected to shift toward legislative and state-level initiatives.
New York Attorney General Letitia James, who has enforced similar rules at the state level, expressed concern over the decision. Her office has previously pursued companies like Equinox and SiriusXM for failing to provide accessible cancellation methods. She indicated that her office is reviewing the ruling and exploring further action to protect consumers.
The FTC is also pursuing a lawsuit against Amazon. It has specifically accused the online retail and technology giant of making it excessively difficult to cancel Prime memberships. That case is scheduled to go to trial next year and may serve as a high-profile test of the regulatory authority of the FTC across businesses with subscription-based models.
Moreover, in Congress, Arizona Senator Ruben Gallego introduced a bill that would write the click-to-cancel requirement into federal law. The legislative proposal is part of the broader “Time is Money” initiative of the former Biden administration. It seeks to eliminate exploitative practices that waste consumer time and complicate everyday transactions.
Future FTC Actions
The Federal Trade Commission still has the option to restart the rulemaking process, but doing so will now require a more comprehensive and detailed economic impact analysis. The court ruling made it clear that the agency must fully comply with procedural standards if it intends to implement broad regulations that significantly affect businesses and consumers.
Restarting the process will not only involve updated cost assessments but also extensive public comments and potentially new hearings. These could delay the implementation of a revised rule by months or even years. The overall efforts to address deceptive subscription practices remain in legal limbo and face renewed opposition from several businesses.
Individual states still retain the authority to enforce their own consumer protection laws. This has led to a fragmented legal landscape in which consumers face different standards and have different rights depending on where they live. Some states, like New York, have imposed their own click-to-cancel requirements on businesses operating within their borders.
Consumers must navigate a patchwork of rules that vary widely in scope and enforcement as a result. Without a consistent national standard, the ease of canceling subscriptions remains uncertain for millions. Until new federal action is taken, consumer rights in this area will depend largely on state-level initiatives and corporate self-regulation.