The FTC Wrote a Rule Requiring That Cancelling a Subscription Be as Easy as Starting One. A Federal Court Vacated It Six Days Before It Took Effect, Over a Missing Cost Analysis.
The Federal Trade Commission finalised its revised Negative Option Rule in October 2024. It was known almost immediately as the click-to-cancel rule, because its central requirement was that a subscription be as easy to leave as it was to join. If a customer could sign up in four clicks on a website, the company could not require a telephone call, a retention conversation, or a visit to a branch to get out.
The rule also required that the terms of a recurring charge be disclosed before checkout rather than after, and that the customer affirmatively consent to them. It was scheduled to take effect on 14 July 2025.
Six Days
On 8 July 2025, the United States Court of Appeals for the Eighth Circuit vacated the rule in its entirety, in Custom Communications, Inc. v. Federal Trade Commission. The compliance deadline was six days away. Companies that had rebuilt their cancellation flows had done so for a requirement that no longer existed.
The court did not rule that the requirements were unlawful, unreasonable, or beyond the commission's authority to impose. It did not address the substance at all.
The Analysis That Was Not Performed
Section 22 of the FTC Act requires the commission to publish a preliminary regulatory analysis when a proposed rule will impose compliance costs above $100 million. The commission concluded that this rule would exceed that threshold. It did not publish the preliminary analysis. It published a final one instead, and argued the omission was harmless.
The Eighth Circuit disagreed, holding that the step is mandatory and that skipping it deprived affected businesses of the opportunity to comment on the cost estimate before the rule was fixed. The rule was vacated on that basis alone.
The finding is entirely procedural and entirely correct. Agencies that write rules are bound by the rules about writing rules, and an agency permitted to skip inconvenient steps when it is confident of the outcome is a worse agency than one that is not. This is a real principle and it is not diminished by what it produced here.
What the Threshold Implies
The analysis was triggered because the commission determined that compliance would cost the affected industries more than $100 million.
Compliance meant letting customers cancel online. The figure is therefore an estimate, produced for regulatory purposes, of what American businesses stand to lose by making it as easy to stop paying as to start. It is not a hardware cost; the cancel button is not expensive to build. It is the value of the friction.
That estimate is what obliged the commission to perform an additional round of analysis, and the failure to perform that analysis is what killed the rule. The friction was substantial enough to require the paperwork, and the paperwork was what the rule died of.
Under Review
The commission has restarted. On 30 January 2026 it submitted a draft advance notice of proposed rulemaking on negative option plans to the Office of Information and Regulatory Affairs, which is the first formal step of a process that produced a rule once already and took several years to do it.
Nothing prevents the commission from arriving at the same requirements a second time, provided it publishes the preliminary analysis. In the interim, the governing standard is the one that applied before October 2024, and the cancellation flow is whatever the company has decided it should be.
Filed from public reporting:
- Sidley Austin — "U.S. FTC Click-to-Cancel Rule Struck Down"
- Mayer Brown — "Click-to-Cancelled! Eighth Circuit Vacates Federal Trade Commission's Revised Negative Option Rule"
- Latham & Watkins — "Eighth Circuit Vacates FTC's Click-to-Cancel Rule Days Before Compliance Deadline"
- Crowell & Moring — "Eighth Circuit Cancels Click-to-Cancel"
- Crowell & Moring — "FTC Moves to Revive 'Click-to-Cancel' Rule Following Eighth Circuit Vacatur"
- WilmerHale — "Eighth Circuit Vacates the FTC's Click-to-Cancel Rule, but Federal and State Regulators Likely to Remain Active"
- Consumer Financial Services Law Monitor — "Eighth Circuit Vacates FTC's Negative Option Rule for Procedural Violations"
- Benesch — "Eighth Circuit Cancels FTC's 'Click-to-Cancel' Rule"
