A federal appeals court has blocked a key consumer protection rule that would have made it easier for Americans to cancel subscriptions online, dealing a blow to the Federal Trade Commission days before the regulation was set to take effect.
The US Court of Appeals for the Eighth Circuit vacated the FTC’s “Click to Cancel” rule after finding the agency failed to follow necessary procedures under the FTC Act during the rule-making process. The decision, issued earlier this week, halts a regulation that would have required businesses to allow consumers to cancel subscriptions using the same method they used to sign up, such as a simple online click.
The court ruled that while deceptive subscription practices are a legitimate concern, the FTC’s procedural missteps rendered the entire rule invalid. “Vacatur of the entire Rule is appropriate in this case because of the prejudice suffered by Petitioners as a result of the Commission’s procedural error,” the judges wrote.
California’s Law Still Stands
The decision comes just as California’s Click to Cancel law went into effect on July 1. The state law imposes similar requirements on businesses, mandating that customers be allowed to cancel online subscriptions as easily as they can sign up for them.
The FTC has faced growing pressure to address so-called “negative option marketing,” where consumers are automatically charged for ongoing subscriptions unless they take active steps to cancel. Complaints to the agency about such practices surged to nearly 70 per day in 2024, up from around 42 daily complaints in 2021.
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