https://arstechnica.com/tech-policy/2025/07/us-court-cancels-ftc-rule-that-would-have-made-canceling-subscriptions-easier/ Skip to content Ars Technica home Sections Forum Subscribe * AI * Biz & IT * Cars * Culture * Gaming * Health * Policy * Science * Security * Space * Tech * Feature * Reviews * Store * AI * Biz & IT * Cars * Culture * Gaming * Health * Policy * Science * Security * Space * Tech Forum Subscribe Story text Size [Standard] Width * [Standard] Links [Standard] * Subscribers only Learn more Pin to story Theme * HyperLight * Day & Night * Dark * System Search dialog... Sign In Sign in dialog... Sign in Canceled Court nullifies "click-to-cancel" rule that required easy methods of cancellation FTC failed to follow rulemaking process required by US law, judges rule. Jon Brodkin - Jul 8, 2025 6:06 pm | 120 Close-up shot of a person's hand using a computer mouse Close-up shot of a person's hand using a computer mouse Credit: Getty Images | PhotoAlto/Alix Minde Credit: Getty Images | PhotoAlto/Alix Minde Text settings Story text Size [Standard] Width * [Standard] Links [Standard] * Subscribers only Learn more Minimize to nav A federal appeals court today struck down a "click-to-cancel" rule that would have required companies to make cancelling services as easy as signing up. The Federal Trade Commission rule was scheduled to take effect on July 14 but was vacated by the US Court of Appeals for the 8th Circuit. A three-judge panel ruled unanimously that the Biden-era FTC, then led by Chair Lina Khan, failed to follow the full rulemaking process required under US law. "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 ruling said. Indicating their sympathy with the FTC's motivations, judges wrote that many Americans "have found themselves unwittingly enrolled in recurring subscription plans, continuing to pay for unwanted products or services because they neglected to cancel their subscriptions." Last year, the FTC updated its 1973 Negative Option Rule by "adding provisions that bar sellers from misrepresenting material facts and require disclosure of material terms, express consumer consent, and a simple cancellation mechanism," the ruling said. The FTC is required to conduct a preliminary regulatory analysis when a rule has an estimated annual economic effect of $100 million or more. The FTC estimated in a Notice of Proposed Rulemaking (NPRM) that the rule would not have a $100 million effect. But an administrative law judge later found that the rule's impact surpassed the threshold, observing that compliance costs would exceed $100 million "unless each business used fewer than twenty-three hours of professional services at the lowest end of the spectrum of estimated hourly rates," the 8th Circuit ruling said. Despite the administrative law judge's finding, the FTC did not conduct a preliminary regulatory analysis and instead "proceeded to issue only the final regulatory analysis alongside the final Rule," the judges' panel said. FTC arguments rejected Summarizing the FTC's arguments, judges said the agency contended that US law "did not require the Commission to conduct the preliminary regulatory analysis later in the rulemaking process," and that "any alleged error was harmless because the NPRM addressed alternatives to the proposed amendments to the 1973 [Negative Option] Rule and analyzed record-keeping and compliance costs." Judges disagreed with the FTC, writing that "the statutory language, 'shall issue,' mandates a separate preliminary analysis for public review and comment 'in any case' where the Commission issues a notice of proposed rulemaking and the $100 million threshold is surpassed." Numerous industry groups and businesses, including cable companies, sued the FTC in four federal circuit courts. The cases were consolidated at the 8th Circuit, where it was decided by Circuit Judges James Loken, Ralph Erickson, and Jonathan Kobes. Loken was appointed by George H.W. Bush, while Erickson and Kobes are Trump appointees. The judges said the lack of a preliminary analysis meant that industry groups and businesses weren't given enough time to contest the FTC's findings: By the time the final regulatory analysis was issued, Petitioners still did not have the opportunity to assess the Commission's cost-benefit analysis of alternatives, an element of the preliminary regulatory analysis not required in the final analysis. And the Commission's discussion of alternatives in the final regulatory analysis was perfunctory. It briefly mentioned two alternatives to the final Rule, either terminating the rulemaking altogether and continuing to rely on the existing regulatory framework or limiting the Rule's scope to negative option plans marketed in-person or through the mail. While the Commission's decision to bypass the preliminary regulatory analysis requirement was certainly not made in bad faith or an "outright dodge of APA [Administrative Procedure Act] procedures," Petitioners have raised 'enough uncertainty whether [their] comments would have had some effect if they had been considered,' especially in the context of a closely divided Commission vote that elicited a lengthy dissenting statement. The 8th Circuit ruling said the FTC's tactics, if not stopped, "could open the door to future manipulation of the rulemaking process. Furnishing an initially unrealistically low estimate of the economic impacts of a proposed rule would avail the Commission of a procedural shortcut that limits the need for additional public engagement and more substantive analysis of the potential effects of the rule on the front end." Republicans opposed rule The FTC issued the proposal in March 2023 and voted 3-2 to approve the rule in October 2024, with Republican Commissioners Melissa Holyoak and Andrew Ferguson voting against it. Ferguson is now chairman of the FTC, which has consisted only of Republicans since Trump fired the two Democrats who remained after Khan's departure. At the time of the vote, Holyoak's dissenting statement accused the majority of hurrying to finalize the rule before the November 2024 election and warned that the new regulation "may not survive legal challenge." Holyoak also argued that the rule is too broad, saying it "is nothing more than a back-door effort at obtaining civil penalties in any industry where negative option is a method to secure payment." Khan's announcement of the now-vacated rule said that too many "businesses make people jump through endless hoops just to cancel a subscription. The FTC's rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want." Photo of Jon Brodkin Jon Brodkin Senior IT Reporter Jon Brodkin Senior IT Reporter Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry. 120 Comments Comments Forum view Loading Loading comments... Prev story Next story Most Read 1. Listing image for first story in Most Read: Court nullifies "click-to-cancel" rule that required easy methods of cancellation 1. Court nullifies "click-to-cancel" rule that required easy methods of cancellation 2. 2. Grok praises Hitler, gives credit to Musk for removing "woke filters" 3. 3. Unless users take action, Android will let Gemini access third-party apps 4. 4. Ars staffers share some of their favorite unexpected 3D prints 5. 5. 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