As a society, our order is kept through the application of laws. These rules are intended to be crafted with facts and logic. At times, following the letter of these laws can be disliked by the people they're designed for, but the legal system is not supposed to function as a popularity contest. That may be reinforced by a decision by a federal appeals panel that likely won't be well-received by anyone who has had to try to cancel an unwanted gym membership.
On July 8, 2025, a panel from the Eighth Circuit Court of Appeals issued a unanimous decision striking down a rule from the Federal Trade Commission (FTC) scheduled to go into effect on July 14. The proposed rule would have required companies to make canceling services and memberships as easy as they are to sign up for. The panel concluded that the FTC had not followed the full rulemaking process requirements and vacated the rule.
Given the number of people who would have met this rule's implementation with thunderous applause (followed by countless "please unsubscribe me RIGHT NOW" clicks at certain websites), an explanation of how it met an ignominious fate is necessary.
Unsubscribing Via the Gordian Knot
Consumers have long raged against what they consider to be the overly complicated, demanding, and unreasonable means required to unsubscribe or leave cable companies, gym memberships, and auto-pay subscription services. Deliberately designed to be time-consuming and frustrating, exit programs hope that customers will become exasperated by the process and simply give up, allowing the billing in continue unabated.
Acting on thousands of complaints a year filed by irate customers, the Biden-era FTC moved to amend and update the 1973 Negative Option Rule, which prohibited companies from using silence or inaction as a legitimate consent to charge for goods and services not requested. After a year of public review, the plan to add the amendment to the federal register was announced in October 2024. Once added, it would take effect 180 days later.
Under the new rules, companies would be required to make important subscription information easy to find and access. Exiting a company's services needed to be available both over the phone and online, and it needed to be as easy to accomplish as signing up had been. Companies that failed to meet these new standards would face civil penalties and other forms of punishment.
Won't Someone Think of the Poor Cable Companies?
The amendment was issued with a 3-2 decision among the FTC Commissioners. The minority members, both Republicans, accused FTC Chair Lina Khan of rushing to finalize the rule before the November 2024 elections. One was Andrew Ferguson, who is now the FTC Chair.
The bone of contention took the form of a preliminary regulatory analysis, which is required if a proposed rule is estimated to have an annual economic effect of over $100 million. A Notice of Proposed Rulemaking (NPRM) was issued by the FTC declaring the amendment wouldn't hit that threshold (which was set in 1978), but an administrative law judge disagreed with that assessment. The FTC continued with the process, opening the door for the ruling by the Eighth Circuit.
Sued by companies in four different federal circuit courts, the suits were consolidated in the Eighth Circuit. The panel, consisting of a George H. W. Bush appointee and two Donald Trump appointees, ruled that the lack of a preliminary regulatory analysis unfairly denied businesses and industry groups enough time to research and contest the FTC ruling.
With the FTC Commissioners panel currently populated entirely by Republicans, it seems unlikely that the "click to cancel" amendment will get another chance of being put into effect. Relief from the red tape of leaving a subscription may have to be addressed by action at the state level. The California legislature has already taken that step with its Automatic Renewal Law.
Related Resources
- FTC Advertising Rules Your Firm Should Be Aware Of (FindLaw's Practice of Law)
- The Federal Trade Commission's Cooling-Off Rule (FindLaw's Litigations and Disputes)
- Buying Plans and Product Subscriptions (FindLaw's Legal Guide to Consumer Transactions)
