Federal Appeals Court Strikes Down FTC’s “Click-to-Cancel” Rule Days Before Implementation

Federal Appeals Court Strikes Down FTC’s “Click-to-Cancel” Rule Days Before Implementation

The U.S. Court of Appeals for the Eighth Circuit struck down the Federal Trade Commission’s “Click-to-Cancel” rule on July 8, 2025, just six days before the regulation was scheduled to take effect on July 14. The unanimous three-judge panel ruled that the FTC committed “fatal” procedural errors during the rulemaking process.

Procedural Violations

The court’s decision focused entirely on procedural deficiencies rather than the merits of the rule itself. Specifically, the FTC violated Section 22 of the FTC Act by failing to conduct a required preliminary regulatory analysis once an administrative law judge determined that the rule’s annual economic impact would exceed $100 million. The FTC had initially estimated the impact would fall below this threshold and therefore did not prepare the preliminary analysis. However, when the administrative law judge later found the rule would easily exceed the $100 million threshold, the agency proceeded directly to a final rule instead of conducting the statutorily required preliminary analysis.

Potential New “Click to Cancel” Rulemaking

The Click-to-Cancel rules would have required businesses to make it “as easy for consumers to cancel their enrollment as it was to sign up.” For communications providers offering subscription services, this would have meant providing online cancellation methods if customers signed up online, obtaining clear consent before charging for memberships or auto-renewals, and disclosing when promotional offers end. The rule was designed to apply to “almost all negative option programs in any media,” covering more than 1 billion paid subscriptions in the U.S.

While the court’s decision provides immediate relief from federal compliance requirements, providers should not assume they can return to their previous practices. The ruling was based solely on procedural errors, meaning the FTC could restart the rulemaking process with proper procedures and potentially reintroduce similar requirements. Our experts note that the FTC would need to go back and repeat most of the rulemaking process if it decided to reissue the rule, which would likely delay any new rule until at least 2026.

State “Click to Cancel” Rules

Similar, state-level regulations remain in effect. California’s automatic renewal law took effect July 1, 2025, and contains provisions and requirements not included in the FTC’s final rule. Massachusetts, New York, and Connecticut have similar laws taking effect later this year or in 2026.

While the federal Click-to-Cancel rule has been vacated, maintaining transparent cancellation processes and clear disclosure practices remains essential for avoiding enforcement actions under other consumer protection laws. Providers should also monitor developments regarding potential future FTC rulemaking efforts, as the agency retains the authority to address subscription practices through a properly conducted rulemaking process.

JSI can assist clients in reviewing subscription service practices, ensuring compliance with existing consumer protection requirements, and monitoring regulatory developments that may affect your operations. For guidance on subscription service compliance or to discuss how these developments affect your business, please contact Brett Hallagan or John Kuykendall.