Companies lost no time challenging the consumer protection rule
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FTCs popular Click to Cancel rule struck down by federal appeals court over procedural issues
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Rule aimed to simplify subscription cancellations, targeting negative option marketing practices
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Consumers still have protection options under state laws and personal finance safeguards
It was one of the most popular consumer protection rules and also one of the shortest surviving. The "Click to Cancel" rule was finalized by the Federal Trade Commission to great acclaim on October16, 2024but today a federal appeals courtnullified it. The decision came in a lawsuit filed byCustom Communications, the U.S. Chamber of Commerceand other groups that claimedthe FTC did not follow proper procedures in enacting the measure.
As its name implies, the rule made it easier for consumers to cancel subscriptions. Toasting the rule back in October was, among others,Lisa Gilbert, co-president of Public Citizen, who said that the subscription process was finally out of the hands of greedy corporations [who] have made a habit of obfuscating and over-complicating the cancellation process. The FTCs new rule is a straightforward solution that will save consumers time, money, and customer service headaches.
But, as is often the case, opponents of the rule began picking at it and argued that the FTC had committedprocedural errors that made the rule illegal. And today,athree-judge panel from the U.S. Court of Appeals for the Eighth Circuit agreed and found that the Commissions rule-making process was procedurally insufficient and Petitioners demonstrated prejudicial error."
The rule basically required that companies had to offer a cancellation option that wasas simple as signing up. There's no shortage of examples. Reviews on ConsumerAffairs have lambasted companies includingAdobe, Ancestry, B&H Photo,BarkBox, Coursera, DISH Network, Dollar Shave Club,eharmony, HelloFresh, Match.com, McAfee,Nutrisystem, Office Depot, Planet Fitness, andSiriusXM Satellite Radiofor making it difficult to cancel a subscription. It also provided that companies had to provide clear and simple terms about recurring charges upfront.
All is not lost though. While the FTC rule has been eliminated,state regulators could use their authority under state laws modeled on Section 5 of the FTC Act or their UDAAP authority under Section 1042 of the Consumer Financial Protection Act to attack any subscription practices that they deem to be unfair, deceptive, or abusive to consumers, observers noted.
Click to Cancel The Rule That Got Canceled
What Was the Rule?
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Required easy cancellation as simple as signing up
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Applied to all negative option marketing (e.g., subscriptions with auto-renew)
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Mandated clear disclosures about recurring charges
A straightforward solution to save consumers time, money, and customer service headaches. Lisa Gilbert, Public Citizen
Why It Was Canceled
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Legal challenge by U.S. Chamber of Commerce & Custom Communications
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Court said FTC failed to conduct required economic analysis
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$100M impact threshold was crossed, but FTC didnt follow proper procedure
Procedural deficiencies are fatal. Opponents of the rule
What You Can Still Do
Protect yourself from hard-to-cancel subscriptions:
Avoid debit cards Use credit cards for better protection
Read terms Uncheck pre-checked boxes
Set calendar reminders Cancel before auto-renew
Document everything Emails, screenshots, call notes
Report issues File complaints with your state attorney general
State laws may still apply under UDAAP authority or FTC Act lookalikes
What was the problem?
Just what was it that companies found objectionable about the rule, other than its benefits for consumers?
The rule was in the form of an amendment to the FTC's Negative Option Rule.Negative option is a term used to describe commercial transactions in which a service will continue unless the consumer take action to either cancel the agreement or reject the goods or services. The Click to Cancel ruleexpanded the coverage beyond pre-notification plans in which sellers send periodic notice offering goods or services to consumers and then charge them for the goods or services if they fail to affirmatively decline to all other forms of negative option marketing.
Under federal law, the FTC must issue a preliminary regulatory analysis when a proposed rule would have an annual effect on the national economy surpassing $100 million.The FTC said that the rule would not have an annual $100 million impact on the economy.However, an Administrative Law Judge found that the proposed rule would have an annual effect surpassing the $100 million threshold.
The companies challenging the rule jumped on that, meanwhile arguing that they of course meant no harm to consumers.
While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the [FTCs] rulemaking process are fatal here, they said. And thus the Click to Cancel rule found itself canceled.
Self-defense measures still available
All is not lost, however. There are still ways consumers can control their destiny, at least when it comes to subscriptions. Here are some suggestions offered last October by Teresa Murray, Consumer Watchdog Director at Public Interest Research Group:
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Think twice about that free trial subscription.You almost always have to link a payment to sign up for something thats free. That can lead to problems if you dont cancel on time.
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Never use a debit card. Always use a credit card for a subscription ormembership. Debit cards link to your bank account. That can make it difficult to get your money back and can even lead to costly overdraft fees.If the company continues to charge you, you have far greater protections with a credit card than a debit card under the Fair Credit Billing Act.
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Read terms and conditions and watch out for pre-checked boxes. A lot of companies may, by default, check boxes that give them permission to charge you after the free trial expires or even sign you up for other products or services or unwanted marketing messages that flood your inbox or voicemail. Uncheck the boxes you dont agree with.
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Keep copies of emails or text messages sent to you when you signed up, and any screenshots of your efforts to cancel, or any notes from a phone call, including the name of who you spoke with.
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Put reminders in your calendar. If its a one-year subscription, schedule a calendar reminder for maybe a couple of weeks before the automatic renewal date, and again a few days ahead of time, and just cancel then. Dont wait until the last minute.
It all else fails, complainto your state attorney general. As noted above, there may be laws in your state that govern subscriptions.
Posted: 2025-07-23 21:53:26
