A U.S. appeals court blocked a Federal Trade Commission policy on Tuesday that was meant to make canceling subscriptions easier.
The court said in its ruling that the FTC “failed to satisfy a procedural requirement by declining to conduct a preliminary regulatory analysis during the rule-making process." It added that the commission acted “arbitrarily” and “capriciously” when passing the rule, and said the FTC’s “procedural deficiencies” in its rule-making process were “fatal here.”
The now-blocked policy was meant to go into effect on July 14.
The FTC announced its click-to-cancel rule in October 2024. The rule would’ve required retailers and anyone else selling products to get consent for subscriptions, auto-renewal plans, and free trials that automatically become paid memberships after a period. And the rule would’ve required businesses to make it “at least as easy” to cancel a subscription as it was to sign up. That means if a consumer signs up for a subscription to a streaming service online, they must also have been allowed to cancel that plan on that same website. Consumers would’ve been able to reject all offers with a single click under the proposed rule.
Lina Khan, chair of the FTC during the Biden administration when the ruling was passed, said on X $TWTR, “The rule was set to go into effect in May but this @FTC slow-walked it—and now a court has tossed it out, claiming industry didn’t get enough of a say. Anyone frustrated by how difficult firms make it to cancel subscriptions can tell the @FTC commissioners to re-issue the rule and urge members of Congress to make it law.”
“The FTC's click-to-cancel rule, which would have made it much easier for consumers to get rid of unwanted online subscriptions, isn't going into effect for one reason: The Biden FTC cut corners and didn't follow the law. Process matters,” Commissioner of the FTC Mark Meador said on X.
Last year, the FTC said it received thousands of complaints about recurring billing and negative option subscription practices each year. It received an average of almost 70 consumer complaints per day in 2024, compared to 42 per day in 2021.
William Gavin contributed to this article.