• by Wendy Davis  @wendyndavis, July 8, 2025

Citing "procedural deficiencies," a federal appellate court on Tuesday struck down the Federal Trade Commission's click-to-cancel rules that aimed to enable consumers to easily terminate recurring subscriptions to newspapers, gyms, and other businesses.

The ruling, issued by a three-judge panel of the 8th Circuit Court of Appeals, comes in response to a lawsuit by the Interactive Advertising Bureau, Michigan Press Association, NCTA -- The Internet & Television Association, Chamber of Commerce and other business groups. They argued that the rules were too broad, and that the FTC failed to follow required procedures before promulgating the regulations.

The click-to-cancel rules, which had been slated to go into effect next week, would have required companies to offer a “simple” cancellation mechanism, and allow consumers to cancel subscriptions through the same medium that was used to purchase them. In practice, the requirements would have required businesses that accept subscriptions through online platforms to also allow people to cancel through an online platform.

The regulations were passed last October in a 3-2 vote. Both Republicans on the commission, including current chair Andrew Ferguson, voted against passage.

The appellate court said in Tuesday's decision that the FTC wrongly failed to conduct a detailed economic analysis of the potential impact of rules.

"While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission’s rulemaking process are fatal here," Circuit Judges James Loken, Ralph Erickson and Jonathan Kobes wrote in an unsigned opinion.

The judges based their decision on an earlier ruling by administrative law judge Carol Fox Foelak, who found last year that complying with the FTC's proposed rules would cost businesses in the U.S. at least $100 million. That finding was significant because the FTC is supposed to conduct an in-depth economic analysis of the potential impact of rules that would affect the economy by $100 million or more.

The appellate panel said Foelak's finding required the FTC to issue a "preliminary regulatory analysis," which should have included "a description of reasonable alternatives to the proposed rule, a cost-benefit analysis of each alternative, and an assessment of the effectiveness of the proposed rule and each alternative in achieving the Commission’s stated objectives in promulgating the rule."

The panel added that the FTC's failure to issue that analysis deprived the Interactive Advertising Bureau and other challengers of "a notable opportunity to dissuade the FTC" from passing the rules.