On July 8th, the United States Court of Appeals for the Eighth Circuit vacated the Federal Trade Commission’s (FTC) amendments to the “Negative Option Rule,” also known as the “Click-to-Cancel Rule,” (hereafter “Rule”). The Court ruled that the FTC failed to fulfill its statutory obligation to issue a “preliminary regulatory analysis,” including a full notice and comment period when it published the Notice of Proposed Rulemaking (NPRM). The FTC could cure the procedural defect, but it is unlikely to do so since current leadership dissented from the FTC’s issuance of the Rule. Despite the nullification of the Rule, existing and proposed federal and state legislation can likely address any perceived gaps.
Under Chairman Ferguson, the Commission has sued several companies over their subscription practices. Even without the Rule, the Commission retains the authority to continue policing online subscriptions and free trials through the Restore Online Shoppers’ Confidence Act (“ROSCA”). Under ROSCA, businesses must clearly and prominently disclose all important subscription terms related to charges before collecting a customer’s billing information. This means companies need to be upfront about any ongoing subscription costs, billing frequency, automatic renewals, and how long the subscription will last. Businesses must also get the customer’s express informed consent and offer a simple straightforward way for consumers to cancel.
Companies also continue to face state automatic renewal laws and state UDAP laws. Some of these laws mirror ROSCA by requiring companies to clearly disclose renewal terms, obtain consumer consent before charging, and create simple mechanisms for cancellation. Other states have gone further by adding rules that require renewal reminders, clear cancellation links, or consent for price increases and material changes to subscription terms.
At both the federal and state level, lawmakers are working to fill the perceived void left by the Click-to-Cancel vacatur through legislation. Since the Court’s ruling, members of Congress have introduced legislation to codify the vacated FTC rule.[1]
Key Takeaways
- Consumer protection laws such as ROSCA, the Telemarketing Sales Rule, the FTC Act, and state automatic renewal laws still cover subscription practices. Regulators retain the ability to enforce against abusive subscription practices and appear committed to doing so under the Trump administration.
- Proposed federal and state legislation can address perceived gaps left by the Rule’s vacatur. Lawmakers at the state and federal level continue to propose an increasing number of bills seeking to address the same or similar conduct the Rule sought to cover.
[1] Click to Cancel Consumer Protection Act of 2025, S.2254, 119th Cong. (2025); Unsubscribe Act of 2025, S.2253, 119th Cong. (2025).
Summer Associate Riley Marelli contributed to this article.
