- Federal appeals court strikes down FTC’s “click to cancel” rule, citing regulatory overreach
- Consumer advocates warn the decision could make canceling subscriptions harder for millions
- Legal uncertainty looms for subscription-based businesses as industry braces for next steps
Companies that provide services long ago learned that if they could persuade customers to subscribe and pay a monthly fee, they would be assured of a constant revenue flow. Many that took that step did not make it easy to unsubscribe.
Enter the Federal Trade Commission, which last year finalized the “click to cancel” rule, requiring companies that sold subscriptions to make it easy for customers to cancel. But what seemed like a victory for consumers has now been overturned by the courts.
The U.S. Court of Appeals for the D.C. Circuit on Tuesday struck down the FTC’s “click to cancel” rule, finding the FTC had exceeded its authority under Section 18 of the FTC Act.
The rule and the ruling
The now-defunct rule, finalized in March 2024, required businesses to provide a straightforward online mechanism—often a single click or clearly labeled button—for customers to cancel subscriptions and recurring charges. It also prohibited companies from obstructing the cancellation process with unwanted prompts, retention offers, or long call center wait times.
But in a 2-1 decision, the court ruled that the rule constituted “a significant expansion of the Commission’s rulemaking powers without explicit congressional authorization.”
“The Commission cannot create sweeping mandates that transform how businesses operate without a clear legislative directive,” the justices wrote.
Industry cheers, advocates warn
Business groups and subscription-based platforms welcomed the ruling as a check on what they characterized as “heavy-handed regulation.” The National Retail Federation and Chamber of Digital Commerce, which had both filed amicus briefs in support of the challenge, praised the decision as a victory for regulatory balance and innovation.
However, consumer protection groups reacted with alarm, pointing out that companies have deployed a well-documented practice of using “dark patterns and deceptive practices” to keep consumers paying for a service they no longer want or need.