Click-to-Cancel Rule Canceled: A Victory for Rule of Law and Regulatory Restraint

A federal appeals court struck down the FTC’s “click-to-cancel” subscription rule, citing procedural violations and regulatory overreach.

Back in 2024, the Federal Trade Commission finalized its so-called “click-to-cancel” rule—an expansive regulatory effort that would have forced businesses to create cancellation processes for subscriptions that were as easy as signing up. The FTC claimed this rule was necessary to combat negative option marketing schemes, a term used for recurring subscriptions that consumers allegedly forget to cancel. However, as I argued at the time, and as industry groups rightly pointed out, this rule wasn't just burdensome. It was procedurally flawed and legally indefensible.

Now, the Eighth Circuit Court of Appeals agrees. In a sweeping decision issued on July 8, 2025, the court vacated the FTC’s rule in its entirety, citing the agency’s failure to follow statutory rulemaking procedures mandated by Section 22 of the FTC Act. (Bloomberg Law coverage)

FTC Skipped their Required Processes

When a federal agency promulgates a rule expected to have an annual economic impact of over $100 million, the law requires it to publish a preliminary regulatory analysis for public comment. This step ensures that interested stakeholders—especially small and mid-sized businesses—have a meaningful opportunity to weigh in on the economic implications and propose alternatives.

Instead, the FTC claimed (without real evidence) that its rule wouldn’t cross the $100 million threshold. But after informal hearings before an administrative law judge in early 2024, even the FTC’s own ALJ found that the rule’s costs would almost certainly exceed that amount. Still, the agency plowed ahead, skipping the preliminary analysis and proceeding directly to the final one.

That shortcut violated the law.

Why Procedure Matters

The Eighth Circuit made clear that procedural safeguards aren’t technicalities—they are essential to good governance. In the court’s words, failing to comply with statutory requirements "could open the door to future manipulation of the rulemaking process" by allowing agencies to lowball economic estimates and avoid early public scrutiny.

And this wasn’t harmless error. The court found that industry groups were deprived of the opportunity to meaningfully engage with the FTC’s assumptions, cost-benefit calculations, and possible alternatives. That’s not a bureaucratic foot fault—it’s a due process failure.

Industry-Wide Overreach

Beyond the procedural missteps, the FTC’s rule would have imposed sweeping mandates on every sector of the economy. As the U.S. Chamber of Commerce and dozens of trade associations pointed out, the rule tried to apply a one-size-fits-all framework to more than 200 million consumer and business contracts. It offered vague requirements like “equal dignity” cancellation mechanisms and attempted to generalize from a small subset of complaints to the entire American economy.

That’s not targeted consumer protection—it’s regulatory overreach.

What’s Next?

The court didn’t need to reach the merits because the FTC’s process was so flawed. However, the strong language in the opinion suggests skepticism about the agency’s attempt to bypass its rulemaking authority. The FTC could try again, but it will now need to start from scratch, with full transparency and proper economic analysis.

This case is a reminder that good intentions don’t excuse bad process. And it underscores why independent judicial review remains a critical check on regulatory power.