What just happened? A federal appeals court has blocked a major consumer protection measure that was set to change how Americans cancel subscriptions and memberships. The "click-to-cancel" rule, crafted by the Federal Trade Commission, was scheduled to take effect on July 14 and would have required companies to make cancellation as simple as signing up. Instead, the US Court of Appeals for the Eighth Circuit vacated the rule, citing procedural missteps by the FTC.
The court's decision arrived just days before the rule's implementation. The three-judge panel found that the FTC, under the leadership of former Chair Lina Khan, failed to follow a key step in the federal rulemaking process.
At issue was the agency's obligation to conduct a preliminary regulatory analysis when a rule is expected to have an annual economic impact of $100 million or more. The FTC initially estimated the costs would fall below this threshold, but an administrative law judge later concluded that compliance costs would exceed $100 million. Despite this, the FTC proceeded without the required preliminary analysis, issuing only a final analysis alongside the completed rule.
The court made clear that its ruling was not an endorsement of deceptive business practices. Judges acknowledged that many Americans have been trapped in recurring subscriptions they no longer want, sometimes because companies make cancellation difficult.
The FTC's now-vacated rule was designed to address these issues by requiring clear disclosures, express consumer consent, and straightforward cancellation options for negative option marketing, where silence or inaction is treated as agreement to continue a service.
But the panel found that the FTC's shortcut deprived businesses and industry groups of the chance to meaningfully comment on the rule's alternatives and cost-benefit analysis. The judges warned that allowing agencies to sidestep these steps could lead to future abuses of the rulemaking process, undermining transparency and public participation.
Industry opposition to the rule was strong, with lawsuits filed by cable companies, trade associations, and the US Chamber of Commerce. These cases were consolidated in the Eighth Circuit, which ultimately ruled that the FTC's procedural error was "fatal" to the rule's validity. The court's decision vacated the rule in its entirety, rather than leaving some parts in place.
The FTC's proposal, first introduced in March 2023, had drawn thousands of public comments and was approved by a narrow 3-2 vote in October 2024. Both Republican commissioners, Melissa Holyoak and Andrew Ferguson, voted against it, arguing the rule was too broad and rushed through ahead of the 2024 election. Since then, the FTC has shifted to Republican leadership following the departure of Khan and the removal of remaining Democratic commissioners.
For now, the defeat of the click-to-cancel rule leaves consumers with the status quo: companies are not required to make cancellation as easy as enrollment, and the FTC must decide whether to restart the lengthy rulemaking process.
Appeals court blocks FTC's "click-to-cancel" rule just days before rollout
