Associated Press Business Writer Michelle Chapman
The “Click-to-Cancel” rule, which businesses were required to allow consumers to easily cancel unwanted subscriptions and memberships, was blocked by the federal court of appeals a few days before it came into effect.
The proposed changes to the Federal Trade Commission, adopted in October, required companies to obtain customer consent before requesting membership, automatic renewal, and programs linked to the free trial.
The FTC said at the time that companies must also disclose if their free trial or other promotional offers have ended and they can cancel their subscriptions as easily as they have started by the customer.
The rules were set to come into effect Monday, but the U.S. Court of Appeals for the Eighth Circuit said this week that the FTC made a procedural error by failing to come up with the preliminary regulatory analysis necessary for a rule with an annual impact on the US economy of more than $100 million.
The FTC argued that it would not need to come up with a preliminary regulatory analysis as it first determined that the impact of the regulations on the national economy would be less than $100 million. An administrative law judge determined that the economic impact would exceed the threshold of more than $100 million.
The court decided to vacate the rules.
“We certainly do not support the use of unfair and deceptive practices in negative option marketing, but the procedural flaws in the committee’s rulemaking process are fatal here,” the court wrote.
The FTC declined to comment Wednesday.
Original issue: July 9, 2025 9:11am EDT
