Days before a new federal rule that would make canceling subscriptions easier was to go into effect, a US federal appeals court has shot the proposal down. Earlier on Tuesday, New York Attorney General Letitia James campaigned to New Yorkers about the importance of the Federal Trade Commission’s proposed “Click-to-Cancel” rule.
The new regulation would have made it easier for consumers to cancel unwanted renewing services and subscriptions. Companies would have been required to make their cancelation process as easy as enrollment, allowing consumers to cancel the same way they used to sign up.
Late Tuesday, the US Court of Appeals for the Eighth Circuit vacated the FTC’s rule. Opposition from potentially affected industries of the planned regulation claimed that the FTC did not follow its own regulatory standard when drafting the rule, citing a clause that if new FTC regulations were to affect the national economy by more than $100 million annually, a regulatory analysis would be needed.
The court deemed that the FTC did not conduct an appropriate analysis and therefore committed a procedural error, leading to the rule being vacated.
The FTC has been working on formalizing the rule since March 2023, when a public notice garnered 16,000 comments from consumers, state and local agencies, and trade groups. The federal agency reported in 2024, they logged on average 70 consumer complaints per day from consumers regarding unwanted or difficult to cancel subscriptions and memberships.
