US appeals court blocks FTC’s ‘click-to-cancel’ rule for subscriptions

A significant development in consumer protection has emerged as a U.S. appeals court has blocked the Federal Trade Commission’s (FTC) “click-to-cancel” rule, which aimed to simplify subscription cancellations by making them as straightforward as the initial sign-up process. This pivotal regulation was originally set to take effect on July 14.

The 8th U.S. Circuit Court of Appeals in St. Louis issued its ruling on Wednesday, citing the FTC’s failure to conduct a preliminary analysis of the rule’s potential costs and benefits. This decision stalls a measure championed under former Democratic Chair Lina Khan, reflecting a broader regulatory push to empower consumers against challenging cancellation procedures.

The “click-to-cancel” rule sought to mandate that businesses offer an equally accessible method for cancellation as they provided for enrollment. For instance, if signing up for a service only required a few clicks, the rule stipulated that consumers should not be compelled to navigate through multiple web pages, interact with complex chatbots, or endure lengthy phone calls to discontinue their subscription.

Furthermore, the regulation included provisions requiring businesses to obtain explicit consent from customers before charging them for memberships, auto-renewals, or programs linked to free trial offers. This aspect aimed to curb deceptive practices where consumers might unknowingly transition into paid subscriptions after trial periods.

While the ruling delays the implementation of this key consumer protection measure, the FTC may still pursue the rule after addressing the court’s concerns regarding a comprehensive cost-benefit analysis. This case underscores the ongoing tension between regulatory efforts to safeguard consumer interests and the stringent legal requirements for implementing such mandates.