FTC Blocked Click-to-Cancel Subscription Trap Rule, for Now

Click-to-cancel is canceled.

Americans were just days away from accessing an easy exit route from so-called subscription traps: On July 14, the Federal Trade Commission’s rule to make subscriptions as easy to cancel as they were to sign up, commonly known as “click-to-cancel,” was set to go into effect.

The 8th Circuit threw a wrench in those plans in a July 8 ruling that blocked the FTC’s click-to-cancel provisions. The court said that the commission failed to follow proper procedure when soliciting feedback on its proposal.

“While we certainly do not endorse the use of unfair and deceptive practices,” the ruling said, “the procedural deficiencies of the Commission’s rulemaking process are fatal here.”

Neale Mahoney, an economics professor at Stanford University, told Business Insider that the most direct impact of the 8th Circuit’s ruling is that “it’s just going to waste people’s time rather than being able to cancel easily.”

“They’re going to have to block out time during work and sit on hold, or they’re going to have to navigate frustrating cancellation flows on company websites,” Mahoney said. “And that I think people have difficult everyday lives, and this just adds to the annoyances of people being able to make the decisions they want as consumers.”

Companies have become increasingly adept at holding consumers in subscription plans using “negative options,” which interpret a consumer’s silence as an agreement to continue purchasing a product, rather than requiring customers to actively agree to recurring charges. This is why you might find yourself looking at your credit card bill one month, trying to decipher a list of charges you don’t remember signing up for.

While the FTC has had a rule in place regulating negative options for decades, the click-to-cancel provision was the most recent amendment to change the way subscriptions operate.

Lina Khan, the FTC’s commissioner under former President Joe Biden who led the subscription rule, pushed back on the 8th Circuit’s claims. She said in a post on X that the rulemaking was a “process that took 3+ years and required reviewing 16k comments & giving industry a chance to present their views at an FTC hearing.”

For consumers, the ruling means spending more time and money navigating the subscription cancellation bureaucracy. The impacts on the economy are broader — Mahoney said that since subscription traps lock people into products and make it hard to switch, they’ll decrease competition.

“We know that when markets are less competitive, then firms have less incentive to lower their prices, they have less incentive to improve quality,” Mahoney said. “So I fundamentally see this as, it’s going to be annoying, it’s going to waste people’s time, but more broadly, it’s going to lessen the forces of competition and lead to higher prices and lower quality in subscription markets.”

The FTC declined to comment on the 8th Circuit’s ruling.

Where subscriptions go from here

The 8th Circuit’s block doesn’t necessarily mean that click-to-cancel is gone. The FTC could choose to appeal the ruling; Erin Witte, director of consumer protection at the nonprofit Consumer Federation of America, told BI that she was surprised to see “how vigorously” President Donald Trump’s FTC defended the rule.

Trump’s FTC filed a brief in March supporting the negative option and click-to-cancel rule, writing that consumers “face unnecessary obstacles from sellers who force them to endure multiple phone calls, long hold times, and countless automated menus. Studies show that most Americans pay hundreds annually for unwanted subscriptions.”

FTC’s commissioner Mark Meador took a different tone last week when he wrote in a post on X following the 8th Circuit’s ruling: “The FTC’s click-to-cancel rule, which would have made it much easier for consumers to get rid of unwanted online subscriptions, isn’t going into effect for one reason: the Biden FTC cut corners and didn’t follow the law. Process matters.”

This suggests that the FTC likely won’t appeal the ruling, Witte said — but there are existing state regulations and congressional efforts to ease the subscription cancellation process. John Breyault, vice president of public policy for telecommunications and fraud at the National Consumers League, referenced California’s click-to-cancel rule that Gov. Gavin Newsom signed into law last year, requiring businesses in the state to make subscriptions as easy to cancel as they were to opt into.

Democratic Sen. Brian Schatz and Republican Sen. John Kennedy also introduced the Unsubscribe Act on July 10. The act would require companies to be more transparent about their subscription models and make them easy to cancel. It would also require companies to periodically notify consumers of their subscription and how they can cancel it.

What subscription rules mean for businesses

Subscriptions are advantageous to businesses because they can rely on that recurring revenue, but making them easy to cancel “seems like a pretty low bar,” said Teresa Murray, who oversees consumer issues at the nonprofit Public Interest Research Group.

“If you’re a company, why would you want to have customers who don’t want to be your customers? Why would you want to take money from people who are making a good-faith effort to cancel? That just doesn’t seem to be a good business model,” Murray said.

She added, however, that consumers should also be held responsible for ensuring they comply with their signed-up terms, such as setting calendar reminders to cancel free trials and keeping copies of email confirmations detailing the subscription agreement.

Breyault said that even with the 8th Circuit’s block, some companies may have already started rethinking their subscription models — but it’s unlikely anything will change wide scale absent a federal regulation.

“I think what you’ll see is that companies will start looking at how they’re marketing these subscriptions, how easy or difficult it is for consumers to cancel them,” Breyault said. “And I think that some of them may take action voluntarily to reform how they do this, but without the rule in place, companies that profit off of offering them deceptively are likely to continue to do so in a way that harms consumers.”