Appeals court strikes down 'click-to-cancel' rule

Published: Wednesday, July 9, 2025 at 8:27 am

Appeals Court Blocks "Click-to-Cancel" Rule, Citing Procedural Flaws

An appeals court has overturned the Federal Trade Commission's (FTC) "click-to-cancel" rule, just days before its scheduled implementation. The court found that the FTC failed to adhere to proper procedural requirements during the rulemaking process. The rule, also known as the Negative Option Rule, aimed to mandate that companies make it as easy for consumers to cancel subscriptions and programs as it is to sign up.

The rule faced legal challenges from industry associations and individual businesses, who argued it was "arbitrary" and "capricious" due to its scope and the FTC's alleged failure to follow procedural guidelines. The U.S. Court of Appeals for the Eighth Circuit sided with the challengers, citing procedural deficiencies in the FTC's process. The court specifically pointed to the FTC's failure to issue a preliminary regulatory analysis, which is required when a rule's annual economic impact exceeds $100 million. The FTC had argued that such an analysis wasn't necessary based on its initial economic impact estimates.

Former FTC commissioner Lina Khan, who was in office during the Biden administration when the rule was developed, criticized the delay in implementation and urged supporters to contact their elected officials. Current FTC commissioner Mark Meador, however, criticized the Biden administration, stating that they "cut corners and didn't follow the law."

Industry groups, such as America's Communications Association Connects, welcomed the court's decision, arguing that the FTC had overstepped its authority. ACA Connects, representing smaller and medium-sized broadband, video, and phone service providers, stated that the rule would have made it more difficult for its members to provide optimal value and customer experiences.

BNN's Perspective:

The court's decision highlights the importance of due process in regulatory actions. While the intent of the "click-to-cancel" rule – to protect consumers from deceptive subscription practices – is laudable, the FTC's failure to follow established procedures undermines the rule's legitimacy. This ruling underscores the need for regulatory bodies to balance consumer protection with the need for fair and transparent processes that allow for industry input.

Keywords: click-to-cancel, FTC, Negative Option Rule, subscriptions, cancellation, court ruling, procedural flaws, consumer protection, industry, rulemaking, appeals court, Lina Khan, Mark Meador, ACA Connects

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