Days before its enforcement date, he 8th U.S. Circuit Court of Appeals in St. Louis was asked by a corporate group to block Federal Trade Commission rules colloquially known as “click to cancel.”

News Release

WASHINGTON, D.C. — A Biden-era plan to curb subscriptions that are difficult to cancel has been blocked by a federal appeals court. It would have mandated that canceling subscriptions be as easy as signing up.

On Tuesday, July 8, the 8th U.S. Circuit Court of Appeals in St. Louis was asked by a corporate group to block Federal Trade Commission rules colloquially known as “click to cancel” just days before the Monday, July 14 enforcement date. The court held that the FTC had committed a “fatal” procedural error in the rules drafting process and overturned the rule.

The rule, announced by the FTC in October last year under then-Chair Lina Khan, would regulate the cancellation process for companies that sell subscriptions, from streaming platforms to gyms. Under the rule, cancelling a subscription would have to take as few steps as signing up, while the signup process also had to provide consumers with all relevant information. Companies that violated the rules would be given civil penalties.

Consumer rights groups welcomed this rule as a protective measure to prevent customers from getting caught up in paying for services they no longer want without an easy way to cancel. The FTC said it received an average of 70 complaints per day on this issue in 2024 alone.

However, the new rule was strongly opposed by business groups, who argued that the “click to cancel” rule covered ground beyond the FTC’s oversight and would put a burden on companies with unjustified costs and regulatory requirements. The vote of FTC commissioners at the time fell along the partisan line and the two Republican members opposed the change.

Business groups including the United States Chamber of Commerce, and the National Federation of Independent Business contested the rules in four federal circuit courts, arguing that the FTC did not satisfy the regulatory process, exceeded its statutory authority and violated administrative law. A judicial committee then consolidated the petitions for review by the U.S. Court of Appeal for the 8th Circuit.

On Tuesday, July 8, the court of appeals granted the petitioner’s request to completely invalidate the “click to cancel” rule. According to the ruling, the FTC failed to conduct a preliminary regulatory analysis that established an alternative to the proposed standard, and it was found that it did not meet important procedural requirements providing for negative economic benefits and effects.

When new standards are created, preliminary regulatory analysis is needed for draft rules that are expected to have an annual impact of more than $100 million on the national economy. The FTC initially estimated that the cost would not exceed this threshold and, after the estimate was revised, did not issue a preliminary analysis. Together with the final rules, the regulatory analysis was only published afterwards.

Dotan Hammer, a partner at the law firm Pearl Cohen, specializing in data and computer regulation, said the court’s ruling meant if the FTC decided to reissue the “click to cancel” rules, it would have to restart much of the associated regulatory process. He estimated the FTC could likely be delayed until 2026, should it decide to reissue the rule.