FTC ‘Click-to-Cancel’ Rule Struck Down by Appeals Court

A federal appeals court vacated the Federal Trade Commission’s Click to Cancel rule — which was to go into effect next week — on procedural grounds.

The FTC‘s Click to Cancel rule would have forced businesses “to make it as easy for consumers to cancel their enrollment as it was to sign up.” The rule was to become effective July 14, 2025. On Tuesday, the U.S. Court of Appeals for the Eighth Circuit issued a ruling vacating the rule, which had been challenged by multiple industry groups.

“While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission’s rulemaking process are fatal here,” the court wrote in the decision Tuesday. The decision is available at this link.

The FTC had said the rule would apply to “almost all negative option programs in any media,” covering more than 1 billion paid subscriptions in the U.S. The term “negative option marketing” refers to a sales tactic in which a consumer’s failure to actively turn down an offer is interpreted as acceptance of a recurring subscription charge.

In the 3-0 ruling, the panel of judges on the appeals court said the FTC had failed in its rulemaking process by failing to produce a preliminary regulatory analysis. By law, the commission is required to produce such an analysis if a rule’s annual effect on the U.S. economy would exceed $100 million. The FTC had asserted it was not required to prepare that analysis because its initial estimate of the annual economic impact was less than $100 million. However, an administrative law judge determined that the Click-to-Cancel rule would meet the $100 million economic impact threshold.

The FTC declined to comment on the ruling.

Multiple industry associations and individual businesses — including NCTA – The Internet & Television Association, representing large cable operators and programmers — challenged the FTC Click-to-Cancel rule in four federal circuit courts on the grounds that the FTC exceeded the scope of its statutory authority, had failed to satisfy a procedural requirement by declining to conduct a preliminary regulatory analysis during the rulemaking process, and acted arbitrarily and capriciously under the Administrative Procedure Act in issuing a rule of this scope. Those petitions were consolidated for review by the 8th Circuit.

The NCTA declined to comment on appeals court ruling. Members of the trade group include Comcast/NBCUniversal, Charter Communications, Disney, Paramount Global, Sony Pictures Entertainment and Warner Bros. Discovery.

ACA Connects, which represents small and midsize cable and telecom providers, applauded the ruling. (The trade group was not a party to any of the lawsuits challenging the FTC rule.)

“The FTC overstepped its authority in adopting these rules, which would have reshaped how businesses handle nearly all aspects of a transaction from enrollment to cancellation,” ACA Connects president and CEO Grant Spellmeyer said in a statement. “The FTC never demonstrated the rule was warranted to address practices of smaller broadband providers. It sought to impose compliance requirements that made it more difficult for our members to provide the best value and customer experience possible. We’re glad the 8th Circuit recognized this reality today.”

The FTC had issued the final rule by a 3-2 vote on Nov. 15, 2024, imposing new requirements “related to any form of negative option program in any media.” The Click-to-Cancel rule was championed by former FTC Chair Lina Khan, a Biden appointee. “Too often, businesses make people jump through endless hoops just to cancel a subscription,” Khan said in announcing the final Click-to-Cancel rule in October 2024. “The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”

The FTC currently comprises three Republican commissioners, including Trump-appointed chairman Andrew Ferguson. In March, President Trump fired the FTC’s two Democratic commissioners, Rebecca Kelly Slaughter and Alvaro Bedoya.

The trade groups that had sued to block the Click-to-Cancel rule had claimed the regulation would impose “onerous” new requirements on disclosures, as well as a separate consent requirement, regulations of “truthful company representative communications with customers,” and prescriptive mandates for service cancellation.