FTC’s Click to Cancel Rule is Vacated, But Remember It Was Not Alone

What happened and why?  On July 8, 2025, a unanimous three-judge panel of the Eighth Circuit Court of Appeals vacated the updated version of the FTC’s Negative Option Rule (also known as the “click to cancel” rule) to have taken full effect later this month.  

The basis for the panel’s ruling was procedural shortcomings in the FTC’s rule-making process. The shortcomings are a technical legal issue described in detail in the ruling , and may have denied the complainants in the case (appellants representing a broad cross-section of assorted industries) an opportunity to attempt to impact the Vacated Rule’s terms during the rule-making process. The court stated its ruling does not “endorse the use of unfair and deceptive practices in negative option marketing” but the ruling did not delve into substantive merit of the Vacated Rule or its lack. The court called the procedural issues “fatal” and made its decision on that basis. Should the FTC seek to appeal the ruling, the court tried to write a high bar to overturn the ruling, which cites substantial precedents (both statutory limits and prior cases) and suggests the court had no choice but to vacate the Vacated Rule in its entirety.

What now?  What legal requirements may be in play for free trials, autorenewals, subscription programs or other negative options?  A number of businesses have expressed a “sigh of relief” at a compliance reprieve based on vacating the Vacated Rule; indeed they will not be required to comply with the Vacated Rule at this time. However, please remember the Vacated Rule was not the only law bearing on subscriptions, automatic renewals and frees trials (or other varieties of negative options) and those other laws remain in effect following this ruling.  

The kinds of business practices the Vacated Rule addressed are still regulated a number of ways at the state level across the country. The 1973 version of the FTC’s Negative Option Rule, which was amended by the Vacated Rule, seems to remain applicable (sans elements of the Vacated Rule).

In addition, ROSCA and the FTC’s enforcement capabilities against unfair or deceptive practices under Section 5 of the FTC Act could be used in enforcing against negative options. A number of compliance requirements continue to apply to many businesses, even if not as broadly as the Vacated Rule would have applied. If the FTC continues to receive, by its own account, dozens of complaints around cancellation practices daily from aggrieved consumers, it may also elect to engage in another round of rulemaking focused on a new version of the Vacated Rule, or perhaps seek to have the Vacated Rule reinstated on appeal.

For more information about what compliance requirements continue to apply after the Vacated Rule, and how they may apply to you, please contact the authors of this alert or your Womble relationship attorney.