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 supposed to take effect.
The U.S. Court of Appeals for the Eighth Circuit vacated the FTC’s “click-to-cancel” rule after finding that the agency failed to follow required procedures under the FTC Act during the rulemaking process. The ruling, issued earlier this week, halts a regulation that would have required companies 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 errors rendered the entire rule invalid. “Vacancy 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 justices wrote.
California law still stands
The decision comes as California’s Click to Cancel law took effect on July 1. The state law imposes similar requirements on businesses, requiring customers to be able to cancel online subscriptions as easily as they can sign up for them.
The FTC has faced increasing pressure to address so-called “negative option marketing,” where consumers are automatically charged for ongoing subscriptions unless they actively cancel. Complaints to the agency about such practices rose to nearly 70 per day in 2024, up from about 42 daily complaints in 2021.
The U.S. government has worked on some FTC rules in recent years, including one that went into effect in October 2024 that made ViewBotting Dreams and faking your followers on social media illegal in the country.
