The Federal Trade Commission’s (FTC) “click-to-cancel” rule was struck down by an appeals court on Tuesday, just days before it was set to take effect.
The rule, announced in October 2024, would have required sellers to make it “as easy for consumers to cancel their enrollment as it was to sign up.”
But the U.S. Court of Appeals for the Eighth Circuit said the FTC erred in its rulemaking process by failing to produce a preliminary regulatory analysis, a statutory requirement for rules whose annual effect on the national economy would exceed $100 million.
The FTC had argued that it was not required to prepare the preliminary analysis because its initial estimate of the rule’s impact on the national economy was under the $100 million threshold — even though ultimately the presiding officer determined the impact exceeded the threshold.
The court disagreed, siding with the petitioners and vacating the rule.
“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 court’s opinion read.
The FTC declined to comment.
The regulation was part of the FTC’s review of the Negative Option Rule, aiming to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring payment programs in the digital economy.
It came as more major media and tech companies — such as Netflix, Disney and Warner Bros. Discovery — worked to shore up their businesses around streaming and sought to reduce the number of subscribers who canceled their subscriptions shortly after signing up.
