A federal appeals court has blocked a key rule from the Federal Trade Commission (FTC) that would have required businesses to make it easier for consumers to cancel subscription services. The regulation, known as the “click to cancel” rule, aimed to prevent companies from using confusing or extended processes to trap users into unwanted recurring charges.
The U.S. Court of Appeals for the Eighth Circuit ruled on Tuesday that the FTC failed to follow legally required procedures in adopting the rule, which was set to take effect on July 14. The court’s decision effectively halts a major effort to reform cancellation policies across subscription-based industries.
Rule Sought to End Frustrating Cancellation Experiences
The FTC’s rule was intended to stop companies from making it harder to cancel a subscription than it is to sign up. It required clear, easy-to-use cancellation mechanisms and would have forced businesses to get explicit consent before converting free trials into paid plans. The regulation targeted practices common across streaming platforms, gyms, and digital services where consumers often encounter multiple screens, hidden buttons, or persistent offers before reaching a cancellation confirmation.
Had it gone into effect, the rule would have directly affected companies such as Amazon, Disney+, Hulu, and Max — all of which offer automatically renewing subscriptions. These services have previously come under scrutiny for requiring users to navigate several pages and click multiple times before successfully ending a subscription.
In 2023, the FTC sued Amazon, accusing it of enrolling users in Prime without clear consent and then intentionally making it difficult to cancel. The lawsuit claimed Amazon required users to go through a multi-step, complex process involving four pages, six clicks, and 15 different choices.
Businesses Opposed the Measure
The proposed rule faced strong opposition from industry groups. The Motion Picture Association (MPA) argued in a filing that the regulation was overly burdensome and would hurt businesses while offering limited consumer benefits. A trade group representing cable and internet providers also challenged the FTC’s authority to implement the rule.
The court ultimately sided with critics who claimed the FTC bypassed important rulemaking steps. According to the Eighth Circuit’s decision, the agency failed to publish a preliminary regulatory analysis that would have considered the rule’s potential impact and alternatives. The FTC had attempted to use an exemption for rules with an estimated economic impact under $100 million, but the court ruled that this exemption was incorrectly applied.
The court emphasized that giving businesses an earlier chance to comment may have influenced the final version of the rule or led to viable alternatives being more thoroughly considered.
FTC Leadership and Political Shift
The rule was first passed under the Biden administration in 2023 but faced delays as leadership at the FTC changed. Current agency chair Andrew Ferguson, appointed under President Donald Trump, opposed the measure and has shifted the agency toward a more industry-friendly approach. The FTC had already delayed the rule’s enforcement from its original May launch date to July, citing the need for additional review.
FTC Commissioner Mark Meador, in a public post following the ruling, blamed the agency’s procedural missteps for the rule’s downfall, suggesting the legal defeat stemmed from the agency not following required steps during the rulemaking process.
The FTC has not issued an official comment on the court’s decision.
Uncertain Future for Subscription Regulation
While the court’s decision prevents the FTC from enforcing the “click to cancel” rule as written, the agency has continued to investigate subscription-related practices. In April, the FTC sued Uber, alleging that the company made it unnecessarily difficult for users to cancel its paid services — signaling that scrutiny over cancellation methods is still a priority.
Still, the future of broad consumer protections in this area remains unclear. While the FTC could revise the rule and attempt to reintroduce it with proper procedures, changes in agency leadership and shifting political priorities may limit the likelihood of a swift reattempt.
Consumer advocacy groups have long argued that without rules like “click to cancel,” companies will continue using manipulative tactics to retain paying users. Critics say that overly complex cancellation processes are designed to frustrate consumers into maintaining subscriptions they no longer want or intended to cancel.
