In a major setback to consumer rights enforcement, the U.S. Court of Appeals for the Eighth Circuit has vacated the Federal Trade Commission’s FTC’s Click-to-Cancel Rule just six days before it was scheduled to take effect on July 14, 2025.
The rule, first proposed in March 2023, aimed to simplify the cancellation process for consumers by mandating that companies allow cancellations via the same method as sign-ups—online, by phone, or in person—with no added hurdles. According to the FTC, the rule would have protected millions of Americans from “subscription traps,” which cost consumers an estimated $1.7 billion annually through hidden charges and hard-to-exit contracts (FTC Notice of Rulemaking).
However, the court ruled that the FTC violated the Administrative Procedure Act by not conducting a required cost-benefit analysis, given that the regulation’s projected economic impact exceeded the $100 million threshold. The judges concluded that the agency’s procedural shortcut rendered the rule invalid in its entirety.
Industry Applauds Ruling; Consumer Advocates Alarmed
The decision marks a major win for several business coalitions, including the U.S. Chamber of Commerce and major entertainment and telecom firms such as Comcast, Charter, and Disney, who argued the rule was overly burdensome and potentially damaging to business models reliant on recurring subscriptions.
The Health & Fitness Association, representing hundreds of gyms and wellness brands, labeled the ruling a “critical victory,” citing concerns that the new regulation would upend existing sales and retention practices.
Yet, consumer rights groups and state officials expressed dismay. According to FTC’s Click-to-Cancel Rule data, complaints about subscription cancellation rose nearly 67% between 2021 and 2024, from approximately 15,300 to 25,500 annually, highlighting growing public frustration. Daily complaints surged from 42 to over 70 in just three years.
New York Attorney General Letitia James, who has previously taken action against companies like Equinox and SiriusXM for deceptive cancellation practices, said her office is “reviewing the ruling and evaluating next steps.”
Regulatory Future Uncertain as States Consider Independent Action
The FTC now faces a critical decision: restart the rulemaking process with full economic analysis or abandon the regulation altogether. A new round of public comments and impact studies could delay enforcement for another 12 to 18 months, according to legal analysts.
States may step in to fill the regulatory gap. California already enforces its own “easy cancel” statute, and New York, Illinois, and Pennsylvania are exploring similar legislative pathways. As federal momentum stalls, these local laws could become the de facto standard for subscription-based industries.
Industry insiders acknowledge that some companies had proactively adapted to comply with the FTC’s rule. However, with the ruling in place, many may pause or reverse implementation. Businesses are now operating in a legal grey zone: consumer expectations have changed, but federal enforcement has stalled.
For consumers, the voided rule could mean a continued struggle with opaque cancellation systems. For policymakers, it underscores the delicate balance between safeguarding consumers and adhering to regulatory protocols.
The court’s decision to halt the FTC’s Click-to-Cancel rule spotlights the growing tension between regulatory ambition and administrative rigor. While businesses cheer the rollback, millions of consumers remain vulnerable to aggressive retention tactics. Whether the FTC retools its approach or states forge ahead independently, the battle over subscription fairness is far from over.
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