On July 8, 2025, the United States Court of Appeals for the Eighth Circuit vacated the Federal Trade Commission's (FTC) "Click to Cancel" Rule.1 The Eighth Circuit held that the FTC had committed a "fatal" procedural error by failing to conduct a preliminary regulatory analysis of the costs and benefits of the Rule and potential alternatives, as required under Section 22 of the Federal Trade Commission Act.2
The Rule, which had been set to go into effect on July 14,3 would have required companies to make it "at least as easy" for a customer to cancel a subscription service as it is to subscribe.4 The Rule also would have prohibited companies from making material misrepresentations when marketing their subscription services and would have required companies to provide clear disclosures and obtain express consent when enrolling a customer in an automatically renewing subscription.5
The Commission, now Republican-controlled, is unlikely to appeal the Eighth Circuit's decision or re-issue the Click to Cancel Rule. However, the FTC likely will continue to conduct targeted enforcement efforts against unfair or deceptive subscription practices. It also appears likely that state Attorneys General will supplement federal enforcement through their own expanded enforcement initiatives. Companies should carefully review their subscription services to make sure that they market the services truthfully and transparently, obtain informed consent, and provide a straightforward way for consumers to unsubscribe.
1. Background on the FTC's Click to Cancel Rule
The FTC's Click to Cancel Rule aimed to increase regulations of "negative option" marketing practices, in which a company treats a customer's silence or failure to act as an acceptance of the company's services or goods.6 In 1973, the FTC issued its first Negative Option Rule, mandating clearer disclosures and cancellation processes for pre-notification programs (such as book-of-the-month clubs) that automatically charge consumers who do not affirmatively opt out of the program after receiving an initial shipment of goods.7
In 2010, Congress expanded the FTC's enforcement purview by enacting the Restore Online Shoppers' Confidence Act (ROSCA), which tasks the FTC with overseeing other negative option practices prevalent in e-commerce, such as automatically recurring subscriptions and free trials that convert into paid subscriptions.8 ROSCA requires companies offering online subscriptions to disclose "all material terms," obtain consumers' "express informed consent" before charging them, and to provide "simple mechanisms" for cancellation.9 However, ROSCA applies only to online transactions and does not specify what constitutes a "simple" cancellation mechanism or how to comply with other provisions.10
In 2019, the FTC issued an Advance Notice of Proposed Rulemaking to regulate negative option marketing practices more comprehensively.11 Four years later, in 2023, the FTC proposed an amended Negative Option Rule that became known as the Click to Cancel Rule.12 The proposed Click to Cancel Rule would bar companies from misrepresenting "any material fact" when marketing their subscription services, mandated "clear and conspicuous" disclosures of any negative option features, require companies to obtain a consumer's "unambiguously affirmative consent" to a negative option feature, and require a "simple mechanism" for cancellation that was "at least as easy to use as the method the consumer used to initiate the negative option feature."13 Under the proposed rule, if a customer signed up online for a company's service, the company would be required to allow the customer to unsubscribe online as well.14 Sweeping more broadly than ROSCA, the proposed rule would apply to any subscription service and negative option plan, including both business-to-consumer and business-to-business transactions.15 And unlike ROSCA, the proposed rule would expressly apply to subscription agreements made in person (such as gym membership enrollments) and require companies to allow consumers to cancel these agreements either online or by phone, in addition to in person.16 Companies would be subject to civil penalties of up to $53,088 for noncompliance with the Rule.17
The FTC initially estimated that the financial impact of the Click to Cancel Rule would be less than a $100 million, but an Administrative Law Judge (ALJ) ultimately found that it would have an impact of at least $100 million.18 For proposed rules with an estimated impact of at least $100 million, Section 22(a) of the FTC Act specifies that the FTC "shall issue a preliminary regulatory analysis" that assesses "the projected benefits and any adverse economic effects" of the rule and "any reasonable alternatives."19 Though the FTC acknowledged the ALJ's determination of the cost of the Click to Cancel Rule, the FTC never issued a preliminary regulatory analysis.20
In October 2024, after receiving over 16,000 comments from stakeholders, the FTC voted 3-2 to issue a finalized version of the Click to Cancel Rule that included similar marketing, disclosure, consent, and cancellation requirements as its initially-proposed Rule.21 Republican Commissioners Holyoak and Ferguson dissented,22 with Commissioner Holyoak writing separately to emphasize that the Rule was overly broad and represented a "missed opportunity to make useful amendments to the preexisting negative option rule."23
A coalition of business groups swiftly challenged the Click to Cancel Rule on substantive and procedural grounds, and the lawsuits were consolidated in front of the Eighth Circuit.24 During the pendency of the litigation, the Commission shifted to a Republican majority and voted to delay enforcement of the Rule until July 14, 2025 to give companies more time to "come into compliance."25
2. The Eighth Circuit's Decision
On July 8, 2025, an Eighth Circuit panel unanimously held that the FTC had violated Section 22 of the FTC Act by not issuing a preliminary regulatory analysis after the ALJ determined that the Rule would exceed $100 million in costs.26 As the Court explained, "[t]he statutory language . . . mandates a separate preliminary analysis for public review and comment 'in any case' where the [FTC] issues a notice of proposed rulemaking and the $100 million threshold is surpassed."27 The Court stressed that the FTC could not "sidestep" procedural requirements and "cu[t] off the ability of regulated parties to respond to the preliminary analysis."28
The Eight Circuit rejected the FTC's contention that its failure to conduct a preliminary analysis was harmless.29 The Court underscored that the plaintiffs had "lost a notable opportunity to dissuade the FTC from adopting the Rule" and to comment on the costs and benefits of the Rule and potential alternatives.30 Furthermore, the Court warned that condoning the FTC's noncompliance "could open the door to future manipulation of the rulemaking process," whereby the FTC could intentionally underestimate a Rule's economic impact to avoid conducting a preliminary regulatory analysis.31
The Court did not reach the plaintiffs' substantive challenges to the Rule, instead concluding that vacatur was appropriate due to the "procedural deficiencies" in the FTC's rulemaking process.32
3. The FTC's Enforcement Efforts Going Forward
The current FTC seems unlikely to appeal the Eighth Circuit's decision or attempt to reissue the Click to Cancel Rule. As mentioned, Commissioner Holyoak and now-Chair Ferguson dissented from the FTC's approval of the Rule,33 and Chair Ferguson has underscored that the FTC needs to "stay in our lane" and avoid regulatory overreach.34 Likewise, newly-appointed Republican Commissioner Mark Meador responded to the Eighth Circuit's decision by criticizing the prior FTC for failing to adhere to procedural requirements.35 Furthermore, President Trump has fired the two remaining Democratic Commissioners, Rebecca Kelly Slaughter and Alvaro Bedoya, who both voted in favor of the Click to Cancel Rule.36
We think it likely that the FTC under Chair Ferguson will focus on using extant statutes to conduct targeted enforcement actions against negative option marketing practices. Section 5 of the FTC Act empowers the FTC to prevent "unfair or deceptive acts or practices,"37 and ROSCA likewise empowers the FTC to enforce disclosure, consent, and cancellation requirements for online subscriptions.38 Across both the Biden Administration and the first Trump Administration, the FTC used these statutes to conduct dozens of individual enforcement actions cracking down on negative option plans39 and other marketing misrepresentations regarding subscription services.40
The FTC has signaled a willingness to continue these enforcement efforts. Chair Ferguson has emphasized that the FTC will prioritize "vigorous enforcement" of extant consumer protection laws, including by "taking action against deceptive billing and cancellation practices."41 Indeed, in March, the FTC stated that it would move forward with a trial against Amazon for violating ROSCA and Section 5 of the FTC Act by enrolling customers in Amazon Prime without their consent and making it difficult to unsubscribe.42 In June the FTC reached a settlement with the Match Group regarding its subscription practices.43 In addition, the Department of Justice, acting on a referral from the FTC in 2024, has ongoing litigation against Adobe for not disclosing early termination fees for subscriptions.44 We expect to see more ROSCA investigations and enforcement actions from the FTC during Chairman Ferguson's term.
Moreover, in response to the Eighth Circuit's decision, members of Congress have also introduced new bipartisan legislation to codify aspects of the FTC's Click to Cancel Rule, though it is uncertain whether Congress will advance this legislation.45
4. Increased Enforcement by State Attorneys General
A bipartisan coalition of Attorneys General from 25 states and the District of Columbia had actively supported the FTC's Click to Cancel Rule46 and it seems likely that state Attorneys General will ramp up their own enforcement efforts against subscription practices. In recent years, state AGs have encouraged consumers to file consumer protection complaints if they encounter difficulty canceling subscriptions,47 and AGs have successfully brought related enforcement actions under federal and state law against a wide range of subscription services.48
In addition to general state laws regulating "unfair or deceptive" business practices, several states (including California,49 New York,50 and Massachusetts51) have recently passed laws or regulations specifically addressing negative option practices, with similar provisions to the FTC's Click to Cancel Rule. Future state-level action in this area seems likely and in line with a broader trend of increased state regulatory activity.52
5. Takeaways
Despite the vacatur of the Click to Cancel Rule, companies still face significant liability exposure for their negative option marketing practices. We recommend that companies that offer goods or services on a subscription or other negative option basis conduct an audit of design-related risks of their subscription services that covers the full life cycle of a consumer's engagement with their services, from initial enrollment through cancellation. The audit should include:
- Disclosures of negative option features during the enrollment flow to ensure they are clear and conspicuous. Consumers should understand how much and how often they will be charged, and how to cancel, without searching for that information.
- Identifying and eliminating user interfaces that could lead to unintentional enrollment in a subscription service.53
- Cancellation methods for compliance with ROSCA and more proscriptive state subscription laws. Although the Click to Cancel Rule has been vacated, the FTC interpreted ROSCA to require that a subscription cancellation method be "at least as easy to use as the method the consumer used to initiate the negative option feature."54
- Customer service systems and refund policies and practices. Most consumer protection enforcement actions are based on consumer complaints, and effective handling of customer concerns can mitigate risk.
Summer Associate Justin Curtis provided invaluable assistance in drafting this client alert.
Footnotes
1 Custom Commc'ns, Inc. v. Federal Trade Comm'n, No. 24-3137, 2025 WL 1873489 (8th Cir. July 8, 2025), https://ecf.ca8.uscourts.gov/opndir/25/07/243137P.pdf.
2 Id. at *9.
3 Id. at *5.
4 Negative Option Rule, 89 Fed. Reg. 90476, 90539 (Nov. 15, 2024) (to be codified at 16 C.F.R. pt. 425), https://www.federalregister.gov/documents/2024/11/15/2024-25534/negative-option-rule.
5 Id. at 90538-39.
6 Id. at 90476-77.
7 Regulations Pertaining to the Use of Negative Option Plans, 38 Fed. Reg. 4896 (Feb. 22, 1973) (to be codified at 16 C.F.R. pt. 425), https://www.govinfo.gov/content/pkg/FR-1973-02-22/pdf/FR-1973-02-22.pdf.
8 15 U.S.C. § 8401-05.
9 15 U.S.C. § 8403.
10 See Rule Concerning the Use of Prenotification Negative Option Plans, 84 Fed. Reg. 52393, 52395-96 (Oct. 2, 2019), https://www.federalregister.gov/documents/2019/10/02/2019-21265/rule-concerning-the-use-of-prenotification-negative-option-plans (noting these limitations of ROSCA).
11 Id. at 52397.
12 Negative Option Rule, 88 Fed. Reg. 24716 (proposed Apr. 24, 2023) (to be codified at 16 C.F.R. pt. 425), https://www.federalregister.gov/documents/2023/04/24/2023-07035/negative-option-rule.
13 Id. at 24734-35.
14 Id. at 24735.
15 See Negative Option Rule, 89 Fed. Reg. at 90489 (Nov. 15, 2024) (clarifying that the Rule would apply to business-to-business transactions).
16 Negative Option Rule, 88 Fed. Reg. at 24735 (proposed Apr. 24, 2023).
17 Id. at 24732.
18 See Custom Commc'ns, 2025 WL 1873489 at *3-4 (explaining this procedural history).
19 15 U.S.C. § 57b-3(b)(1)(B)-(C).
20 See Custom Commc'ns, 2025 WL 1873489 at *4.
21 Negative Option Rule, 89 Fed. Reg. at 90538-39 (Nov. 15, 2024).
22 Federal Trade Commission Announces Final "Click-to-Cancel" Rule Making It Easier for Consumers to End Recurring Subscriptions and Memberships, FTC (Oct. 16, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/10/federal-trade-commission-announces-final-click-cancel-rule-making-it-easier-consumers-end-recurring.
23 Dissenting Statement of Commissioner Melissa Holyoak on the Negative Option Rule (Oct. 16, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/holyoak-dissenting-statement-re-negative-option-rule.pdf.
24 Custom Commc'ns, 2025 WL 1873489 at *5.
25 Id.
26 Id. at *6.
27 Id.
28 Id. at *7.
29 Id.
30 Id. at *8.
31 Id.
32 Id. at *9.
33 Federal Trade Commission Announces Final "Click-to-Cancel" Rule Making It Easier for Consumers to End Recurring Subscriptions and Memberships, FTC (Oct. 16, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/10/federal-trade-commission-announces-final-click-cancel-rule-making-it-easier-consumers-end-recurring.
34 Prepared Remarks of Commissioner Andrew Ferguson at the 2024 International Consumer Protection and Enforcement Network Fall Conference (Sept. 27, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/9.27.2024-Ferguson-ICPEN-Remarks.pdf.
35 Hannah Parker, Court Blocks Policy Meant to Make Canceling Subscriptions Easier, Quartz (July 9, 2025), https://qz.com/court-blocks-ftc-subscription-cancelation-policy.
36 Although a District Court concluded on July 17, 2025, that Slaughter's firing was illegal and ordered her reinstatement, the D.C. Circuit entered an administrative stay of the District Court's order on July 21. See Mike Scarcella and David Shepardson, US Appeals Court Temporarily Blocks Order Reinstating FTC Commissioner, Reuters (July 22, 2025), https://www.reuters.com/legal/government/us-appeals-court-temporarily-blocks-order-reinstating-ftc-commissioner-2025-07-21/; see also Slaughter et al v. Trump et al, No. 1:2025cv00909 (D.D.C. July 17, 2025), https://law.justia.com/cases/federal/district-courts/district-of-columbia/dcdce/1:2025cv00909/278902/51/ .
37 15 U.S.C. § 45(a)(1).
38 15 U.S.C. § 8401-05.
39 See Rule Concerning the Use of Prenotification Negative Option Plans, 84 Fed. Reg. at 52396 (Oct. 2, 2019); Negative Option Rule, 89 Fed. Reg. at 90477 (Nov. 15, 2024).
40 See FTC's Settlement with MoviePass Highlights Expanded Use of Consumer Protection Rules, WilmerHale (June 10, 2021), https://www.wilmerhale.com/en/insights/blogs/wilmerhale-privacy-and-cybersecurity-law/20210610-ftcs-settlement-with-moviepass-highlights-expanded-use-of-consumer-protection-rules.
41 Chair Ferguson, Testimony of the Federal Trade Commission Before the Committee on Appropriations, Subcommittee on Financial Services and General Government (May 15, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/FTC-Chairman-Andrew-N-Ferguson-FSGG-Testimony-05-15-2025.pdf.
42 Haleluya Hadero, FTC Reverses Its Request for a Delay in an Amazon Trial, Says It Has Resources to Litigate the Case, AP News (Mar. 13, 2025), https://apnews.com/article/amazon-ftc-doge-trial-delay-3265683227438a61503d2f6727cab5bb; Complaint for Permanent Injunction, Civil Penalties, Monetary Relief, and Other Equitable Relief, Federal Trade Comm'n v. Amazon.com, Inc., No. 2:23-cv-0932 (W.D. Wash. June 21, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/amazon-rosca-public-redacted-complaint-to_be_filed.pdf.
43 Spencer Brewer, Match Group Settles FTC's Fake-Unsubscribe Suit, Law360 (June 9, 2025), https://www.law360.com/compliance/articles/2351266/match-group-settles-ftc-s-fake-unsubscribe-suit.
44 Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Equitable Relief, United States of America v. Adobe Inc., No. 5:24-cv-03630-BLF (N.D. Cal. July 23, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/040-UnredactedComplaint.pdf.
45 A Bill to Increase Consumer Protection with Respect to Negative Options in All Media, Including on the Internet, and for Other Purposes, S.2253, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/2253.
46 Letter from the Attorneys General of New York, Pennsylvania, Alabama, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Oklahoma, Oregon, Vermont, Washington, and Wisconsin, to April Tabor, Sec'y, FTC (June 23, 2023), https://www.attorneygeneral.gov/wp-content/uploads/2023/06/2023.06.23-Comment-of-26-State-AGs-Negative-Options-Rule-Filed.pdf.
47 Attorney General James Urges New Yorkers to Take Advantage of New "Click to Cancel" Rule, Office of the New York State Attorney General (July 8, 2025), https://ag.ny.gov/press-release/2025/attorney-general-james-urges-new-yorkers-take-advantage-new-click-cancel-rule; Consumer Alert: Attorney General's consumer survey reveals that millions of Washingtonians may have been unintentionally enrolled in a subscription service, Office of the Attorney General of Washington (Oct. 12, 2022), https://www.atg.wa.gov/news/news-releases/consumer-alert-attorney-general-s-consumer-survey-reveals-millions-washingtonians.
48 Attorney General James Secures $600,000 from Fitness Company Equinox for its Hard-to-Cancel Memberships, Office of the New York State Attorney General (May 30, 2025), https://ag.ny.gov/press-release/2025/attorney-general-james-secures-600000-fitness-company-equinox-its-hard-cancel; AG Schwalb Secures Refunds for DC Consumers Improperly Charged Subscription Fees by Online Underwear Retailer "Adore Me," Office of the Attorney General for the District of Columbia (June 16, 2023), https://oag.dc.gov/release/ag-schwalb-secures-refunds-dc-consumers-improperly; Attorney General James Stops SiriusXM from Trapping New York Customers in Unwanted Subscriptions, Office of the New York State Attorney General (Nov. 22, 2024), https://ag.ny.gov/press-release/2024/attorney-general-james-stops-siriusxm-trapping-new-york-customers-unwanted.
49 CA Bus. & Prof. Code § 17602 (2024), https://law.justia.com/codes/california/code-bpc/division-7/part-3/chapter-1/article-9/section-17602/.
50 NY Gen. Bus. Law § 527-A, https://www.nysenate.gov/legislation/laws/GBS/527-A.
51 940 CMR 38.00, https://www.mass.gov/news/ag-campbell-releases-junk-fee-regulations-to-help-consumers-avoid-unnecessary-costs.
52 See Frank Gorman, et. al., CFPB Report Signals Shift to State-Level Enforcement, WilmerHale (Jan. 22, 2025), https://www.wilmerhale.com/en/insights/client-alerts/20250122-cfpb-report-signals-shift-to-state-level-enforcement.
53 See Frank Gorman and Reade Jacob, et. al., FTC Targets "Dark Patterns" in Actions Against Amazon and Publishers Clearing House, WilmerHale (Aug. 14, 2023), https://www.wilmerhale.com/en/insights/client-alerts/20230814-ftc-targets-dark-patterns-in-actions-against-amazon-and-publishers-clearing-house.
54 See FTC, Enforcement Policy Statement Regarding Negative Option Marketing (Oct. 22, 2021), https://www.ftc.gov/system/files/documents/public_statements/1598063/negative_option_policy_statement-10-22-2021-tobureau.pdf.
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