On July 14, a major consumer protection initiative from the Federal Trade Commission (FTC) hit a roadblock when the U.S. Court of Appeals for the 8th Circuit struck down the long-awaited “Click-to-Cancel” rule. The regulation aimed to require businesses to make subscription cancellations as simple as signing up—an effort to combat frustrating opt-out processes used by many companies.
However, the court ruled that the FTC failed to follow proper rulemaking procedures, specifically by skipping a required economic impact analysis. While the court did not oppose the rule’s intent, the procedural error proved fatal. The decision leaves consumers stuck navigating complex cancellation systems, and a political shift at the FTC makes a revival of the rule unlikely—at least in the near term.
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A Blow to Consumer-Friendly Reform
On July 14, the U.S. Court of Appeals for the 8th Circuit blocked the Federal Trade Commission’s (FTC) long-anticipated rule aimed at making it easier for consumers to cancel subscriptions. The so-called “Click-to-Cancel” rule, which would have required companies to offer straightforward cancellation options online, has been struck down due to procedural missteps in the rulemaking process—not because of any objection to the rule’s substance.
Unanimous Decision from the Eighth Circuit
The three-judge panel—two of whom were appointed during the Trump administration—voted unanimously to reject the FTC’s proposed regulation. The judges emphasized that their decision was based on the FTC’s failure to adhere to procedural requirements, rather than opposition to the rule itself.
“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 panel wrote.
The Fatal Flaw: Regulatory Process Lapses
At the core of the court’s decision was the FTC’s failure to conduct a preliminary regulatory impact analysis, which is mandated for any rule expected to exceed $100 million in annual economic impact. The FTC initially concluded during the Notice of Proposed Rulemaking that the rule wouldn’t cross that threshold.
However, an administrative law judge later disagreed, arguing that the agency underestimated the potential economic effects. This discrepancy rendered the rule procedurally invalid and left businesses without adequate time to provide meaningful feedback.
Strong Pushback from Industry Lobbyists
The legal challenge was spearheaded by industry lobbying groups, including those representing internet and cable providers, insurance firms, gyms, and other sectors that benefit from making subscription cancellations unnecessarily complex.
These organizations argued that simplifying the cancellation process could result in a surge of “accidental cancellations,” threatening their revenue streams—a clear indicator of the industry’s reliance on consumer friction.
Political Landscape Further Complicates Revival
Although the court did not reject the merits of the policy, a revival under the current political leadership appears unlikely. Originally proposed during the Biden administration, the rule faced opposition from the two Republican FTC commissioners at the time.
One of those commissioners, Andrew Ferguson, now leads the FTC, and the agency currently has no Democratic commissioners following President Trump’s recent dismissal of the remaining Biden-era holdovers.
What It Means for Consumers
With the rule effectively shelved, the frustrating and outdated methods for canceling services—such as lengthy customer support calls and even postal mail requests—remain in place. While the intent of the FTC’s rule aligned with growing consumer demand for transparency and ease, the procedural shortfall has left that goal unrealized for now.
Frequently Asked Questions
What was the FTC’s Click-to-Cancel rule?
The Click-to-Cancel rule was a proposed regulation by the Federal Trade Commission requiring businesses to make it easy for consumers to cancel subscriptions—ideally through the same method used to sign up (e.g., online).
Why did the court strike down the rule?
The U.S. Court of Appeals for the 8th Circuit ruled that the FTC failed to conduct a required regulatory analysis for rules with major economic impact, making the rule procedurally invalid.
Did the court oppose the content of the rule?
No. The court specifically stated that it did not oppose the goal of protecting consumers but ruled against the process the FTC followed to implement the rule.
Who challenged the rule?
Lobbying groups representing industries such as cable, internet, insurance, and gyms—businesses that often benefit from complex cancellation processes—challenged the rule in court.
What happens now that the rule is struck down?
Consumers remain subject to existing, often cumbersome cancellation methods, such as phone calls, paperwork, or in-person requests, depending on the service provider.
Can the rule be reinstated?
Possibly, but it would require the FTC to restart the rulemaking process and follow all regulatory requirements. With current political leadership at the FTC, a revival is unlikely in the near term.
Why is this ruling significant for consumers?
It keeps in place barriers to easily cancel unwanted subscriptions, affecting millions of users who face long wait times, unclear terms, or unnecessary steps just to opt out.
Conclusion
The court’s decision to strike down the FTC’s Click-to-Cancel rule marks a significant setback for consumer rights in the digital age. While the regulation aimed to simplify the often-frustrating process of canceling subscriptions, its downfall was not due to opposition to its purpose—but to the FTC’s failure to follow procedural requirements.
As a result, millions of consumers remain at the mercy of convoluted cancellation processes designed to deter them from opting out. With the current leadership and political makeup of the FTC, the path forward for similar protections appears uncertain.
