8th Circuit Vacates FTC’s Click-to-Cancel Rule Over Procedural Issues

On July 8, 2025, the US Court of Appeals for the Eighth Circuit unanimously vacated the Federal Trade Commission’s (FTC) “click-to-cancel” rule. The regulation would have required businesses to offer consumers an online cancellation process that is as seamless as enrollment. The decision underscores the strict procedural requirements of the Administrative Procedure Act (APA) and raises new questions about consumer protection in subscription-based models.

Background on the FTC Click-to-Cancel Regulation

The FTC’s updated Negative Option Rule built upon its 1973 framework by adding explicit provisions for:

• Clear disclosure of all material terms
• Express consumer consent before enrollment
• A one-click or equivalently simple cancellation mechanism

With subscription services spanning streaming video, cloud software, and digital publications, recurring charges can quickly compound. In its Notice of Proposed Rulemaking (NPRM), the FTC estimated minimal industry impact, but an administrative law judge later found compliance costs would exceed $100 million annually.

Court Ruling: Procedural Deficiencies Are Fatal

Failure to Conduct a Preliminary Regulatory Analysis

Under the APA and the Regulatory Flexibility Act, agencies must publish a preliminary regulatory analysis for any rule with an annual economic impact over $100 million. Although the FTC’s NPRM claimed the threshold was not met, the agency’s own administrative law judge calculated compliance costs at roughly $115 million, assuming 23 hours of professional services per business at typical hourly rates. The FTC proceeded to issue only a final analysis alongside the final rule, bypassing the separate preliminary step.

“The statutory language, ‘shall issue,’ mandates a separate preliminary analysis for public review and comment ‘in any case’ where the Commission issues a notice of proposed rulemaking and the $100 million threshold is surpassed.”
— Eighth Circuit opinion

Insufficient Opportunity for Public Comment

Judges James Loken, Ralph Erickson, and Jonathan Kobes noted that without the preliminary analysis, industry stakeholders lacked adequate time to critique the FTC’s cost–benefit assumptions or suggest less burdensome alternatives, such as limiting the rule’s scope to in‐person or mail-based negative option plans.

Industry and Political Reactions

Cable providers, streaming platforms, and SaaS vendors filed suit in multiple circuits, consolidated in the Eighth Circuit. Republican FTC members—now holding a 3-2 majority after the agency dismissed its two remaining Democrats—had voted 3-2 against the rule in October 2024. Commissioner Melissa Holyoak warned that the rule might not survive judicial review, calling it a “broad back-door effort” to impose civil penalties.

Impact on Subscription-Based Businesses and SaaS Platforms

Subscription economics rely heavily on controlling churn rates. User experience teams often implement friction at cancellation points—such as multiple confirmation screens or mandatory feedback forms—to slow cancellations. Technical workarounds include:

• API-based cancellation endpoints that require OAuth-authenticated calls
• Custom webhooks to notify third-party account aggregators
• In-app hooks on iOS and Android to force users into app-store dispute flows

Without a clear standard, some companies voluntarily adopted “one-click” approaches using embedded widget components. Open‐source libraries like CancelJS and CancellationKit enable rapid integration, but widespread adoption remains uneven.

Legal and Procedural Implications for Federal Rulemaking

Experts in administrative law warn that if agencies can understate economic impacts to avoid preliminary analyses, the APA’s transparency safeguards are at risk. Georgetown University professor Linda Holt notes, “The Eighth Circuit’s insistence on a stand-alone preliminary analysis restores the intended two-stage public comment process.” Meanwhile, the Office of Information and Regulatory Affairs (OIRA) continues to review interagency guidance on cost–benefit methodologies.

Technological Workarounds and Industry Responses

In the wake of the ruling, industry coalitions such as the Subscription Services Alliance (SSA) are drafting voluntary best practices. Proposed standards include JSON schemas for cancellation requests and RESTful API conventions to ensure that developers can build uniform cancellation flows across platforms. Several startups, including CancelHub and OneStopCancel, promise turnkey solutions that comply with both current FTC guidance and pending state regulations.

Expert Opinions and Next Steps

Regulatory attorney Marcus Liang of Covington & Burling explains, “The FTC may reinitiate rulemaking, but any new proposal must heed the court’s demand for rigorous economic analysis up front.” User-experience consultant Priya Mehra adds, “Consumers benefit from effortless cancellation flows, but firms also need predictability. A clear technical standard will help both sides.”

Outlook and Potential Legislative Action

Senators on both sides of the aisle have introduced the Subscription Cancellation Fairness Act, which would codify a one-click cancellation requirement and a standard API protocol. The bill, currently under committee review, could preemptively set compliance criteria and relieve the FTC of ad hoc rulemaking burdens.