A recent ruling from the U.S. Court of Appeals for the Eighth Circuit has put the brakes on a federal rule meant to simplify canceling subscriptions. This “click-to-cancel” rule was designed to let consumers cancel subscriptions as easily as they signed up for them. However, the court decided that the Federal Trade Commission (FTC) didn’t follow the right procedures while creating this rule.
The court acknowledged concerns over unfair practices in subscription marketing but pointed to serious procedural missteps in the FTC’s approach. It concluded that these errors invalidated the entire rule.
Set to take effect on July 14, the rule aimed to cover all negative option marketing, which often interprets a customer’s silence as agreement to continue a subscription. The previous rule, established in 1973, had a much narrower scope. The new rule would have compelled companies to eliminate hurdles like lengthy customer service chats when someone wanted to cancel.
This court decision comes as a significant win for the businesses that argued against the FTC’s measures. Critics of subscription practices have been vocal, with New York Attorney General Letitia James pushing for change. James had encouraged residents to prepare for the new rule, emphasizing that canceling a subscription should be straightforward.
The FTC has been flooded with complaints about subscription services, facing nearly 70 consumer complaints daily in 2024—an increase from 42 complaints per day in 2021. This surge indicates a growing frustration among consumers over subscription policies, which can often lead to unwanted charges. Similar measures at the state level have shown promise; for instance, James secured $600,000 in penalties from companies like Equinox for making cancellations difficult.
Experts suggest this ruling could prompt the FTC to reconsider its approach to consumer protections. It may lead to a more cautious and procedurally rigorous process in the future. Furthermore, the ongoing conversation about subscription transparency is likely to continue on social media, where users share both horror stories and tips for navigating subscription traps.
The recent ruling highlights the need for balance—ensuring consumer protections while respecting regulatory procedures. As the landscape of subscription services evolves, consumers will continue to advocate for their rights in the face of complex marketing practices.
If you’re interested in learning more about evolving subscription practices, check out the FTC’s resources on consumer rights here.
