In a significant development, the U.S. Court of Appeals for the Eighth Circuit has invalidated the Federal Trade Commission’s (FTC) click-to-cancel rule, which was designed to simplify the process for consumers to terminate recurring subscriptions and memberships. This decision, issued on July 8, 2025, represents a major setback for consumer protection advocates who have long criticized the convoluted cancellation procedures employed by many businesses.
Background on the ‘Click-to-Cancel’ Rule
The FTC’s click-to-cancel rule was finalized in October 2024 as part of the agency’s ongoing efforts to modernize consumer protection regulations in the digital age. The rule aimed to address the growing number of consumer complaints regarding the difficulty of canceling subscriptions, particularly those that automatically renew without explicit consent.
Key provisions of the rule included:
– Simplified Cancellation Process: Businesses were required to make the cancellation process as straightforward as the sign-up process. For instance, if a consumer subscribed to a service online, they should be able to cancel it through the same online platform with comparable ease.
– Clear Disclosures: Companies had to provide clear and conspicuous information about the terms of the subscription, including the fact that it would continue until canceled, the amount and frequency of charges, and the steps required to cancel.
– Express Informed Consent: Before charging consumers, businesses needed to obtain explicit consent for the subscription terms, ensuring that consumers were fully aware of what they were agreeing to.
– Prohibition of Misleading Practices: The rule barred companies from misrepresenting any material facts related to the subscription service.
The rule was scheduled to take effect on July 14, 2025, after an initial delay intended to give businesses additional time to comply. ([womblebonddickinson.com](https://www.womblebonddickinson.com/us/insights/alerts/ftc-defers-some-click-cancel-rule-enforcement-july-14-2025?utm_source=openai))
Legal Challenge and Court Decision
The implementation of the click-to-cancel rule faced immediate opposition from various industry groups and businesses that rely heavily on subscription models. The U.S. Chamber of Commerce, along with trade associations representing major cable, internet, and media companies—including Comcast, Charter Communications, Disney Entertainment, and Warner Bros. Discovery—filed lawsuits challenging the rule’s validity.
The primary argument against the rule was that the FTC had exceeded its statutory authority by implementing such sweeping changes without adhering to proper procedural requirements. Specifically, the plaintiffs contended that the FTC failed to conduct a preliminary cost-benefit analysis, a necessary step for regulations with an economic impact exceeding $100 million.
On July 8, 2025, the Eighth Circuit Court of Appeals sided with the plaintiffs, ruling that the FTC did not follow the required procedures in promulgating the rule. The court emphasized that the lack of a preliminary regulatory analysis rendered the rule invalid. ([reuters.com](https://www.reuters.com/legal/legalindustry/us-click-cancel-rule-blocked-by-appeals-court-2025-07-08/?utm_source=openai))
Implications for Consumers and Businesses
The court’s decision to vacate the click-to-cancel rule has significant implications for both consumers and businesses:
– For Consumers: The ruling means that consumers may continue to face challenges when attempting to cancel subscriptions. The absence of a federal mandate requiring simplified cancellation processes allows businesses to maintain existing practices, which often involve navigating complex procedures or interacting with customer service representatives trained to retain subscribers.
– For Businesses: Companies that had begun adjusting their subscription and cancellation processes to comply with the anticipated rule may now reconsider these changes. However, it’s important to note that while the federal rule has been overturned, some states have implemented their own regulations aimed at protecting consumers from deceptive subscription practices. For example, California recently passed a click-to-cancel law requiring businesses to make it as easy to cancel a subscription as it is to sign up.
Ongoing Efforts and Future Outlook
Despite the court’s decision, the issue of subscription cancellation practices remains a focal point for consumer protection advocates and regulatory bodies. The FTC has indicated its commitment to addressing deceptive practices in subscription services and may seek alternative avenues to implement similar protections.
Additionally, the legal landscape continues to evolve. In November 2024, a New York state judge ruled against Sirius XM Holdings in a lawsuit filed by the New York Attorney General, which accused the company of making subscription cancellations unduly difficult. The court found that Sirius XM’s policies violated the federal Restore Online Shoppers’ Confidence Act and ordered the company to revise its cancellation process. ([reuters.com](https://www.reuters.com/legal/sirius-xm-found-liable-new-york-lawsuit-over-subscription-cancellations-2024-11-22/?utm_source=openai))
These developments suggest that, while the federal click-to-cancel rule has been overturned, the push for more consumer-friendly subscription practices is far from over. Businesses should remain vigilant and consider proactively simplifying their cancellation processes to align with evolving consumer expectations and state regulations.
