The countdown to July 14, 2025, was nearly over—but now, the FTC’s proposed “click-to-cancel” rule was invalidated less than a week before its “go live” date. This surprising turn of events is a win for companies who do business using subscription models and a loss for consumers who want easier ways to cancel them.
On October 16, 2024, the FTC announced the click-to-cancel rule, which would require sellers to make it just as easy for consumers to cancel their subscriptions as it was to sign up. This rule was part of an effort to update the FTC’s 1973 Negative Option Rule to address unfair or deceptive practices related to subscriptions, memberships, and other recurring payment programs.
The FTC proposed the click-to-cancel rule as a modernization effort to respond to the evolving digital economy, where businesses have increasingly easy ways to enroll consumers in ongoing products and services. For example, companies offering streaming services, gym and cosmetic memberships, or newspaper subscriptions often enroll customers with promises of free trials or discounted introductory offers. However, many consumers have reported difficulty in canceling these services once the trial ends, facing hidden fees, complicated cancellation processes, or unclear disclosures.
With digital platforms making it easier than ever for businesses to enroll consumers in ongoing services, this rule was designed to level the playing field and protect consumers from unexpected charges and frustrating cancellation experiences. The click-to-cancel rule sought to address these challenges by requiring simpler cancellation methods, which would require consumers to be able to easily cancel subscriptions, rather than being forced to call customer service or jump through hoops.
On July 8, 2025, the Eighth Circuit vacated the click-to-cancel rule, and as a result, it will not go into effect on July 14. The FTC failed to follow the proper rulemaking procedure. Specifically, when a proposed rule is expected to have an economic impact of $100 million or more, the FTC is required to perform a "preliminary regulatory analysis." The FTC initially estimated that the regulatory costs of the rule would be under $100 million, but during hearings on the rule, it became clear that the true economic impact would exceed the $100 million threshold. Despite this, the FTC did not revise its estimate or perform the required analysis. The Eighth Circuit ultimately ruled that this failure to conduct a preliminary regulatory analysis—once it became evident that the cost threshold had been surpassed—was a "fatal" procedural error that invalidated the rule.
The Eighth Circuit’s decision to vacate the click-to-cancel rule does not prevent the FTC from reintroducing it. The rule could still move forward if the FTC follows proper procedures—particularly by conducting a preliminary regulatory analysis. However, it seems unlikely that reviving the rule would be an emphasis of the current FTC leadership.
If you have questions about this ruling and its impact on your business, or if you need assistance reviewing your company’s FTC compliance practices, please reach out to Brian McCormac or your BrownWinick attorney. Special thanks to summer associate Mia Savicevic for her assistance with this article.
