The Rule Was Vacated. The Problem Was Not.
This series examines U.S. subscription-cancellation law after the Eighth Circuit vacated the Federal Trade Commission’s 2024 Negative Option Rule. The immediate question is not simply whether “click to cancel” survived; it is which protections still operate, what the court actually rejected, and what the FTC is now trying to rebuild. By the end of this series, readers should be able to separate the restored legal baseline from the vacated rule and from the FTC’s still-open effort to create a modern standard.
A subscription can be easy to start and hard to stop
Imagine a service advertised as a low-cost trial. A customer enters billing information, uses the service for a few days, and then does nothing. Under the contract, that silence becomes permission to begin monthly charges. The customer may not notice the first charge, may forget about the trial, or may discover that ending the subscription requires a phone call, a long wait, or a trip to a physical location.
That arrangement is a negative option. The defining feature is not merely that money is collected repeatedly. It is that the seller treats the customer’s failure to reject or cancel as acceptance—or continuing acceptance—of the offer. The FTC identifies four common forms: prenotification plans, continuity plans, automatic renewals, and free-to-pay or nominal-fee-to-pay conversions. In a prenotification plan, a seller sends periodic notices and ships goods unless the customer declines. In a continuity plan, the customer agrees in advance to receive recurring goods or services until cancellation. In an automatic renewal, a subscription continues when its term expires unless the customer acts. In a free-trial conversion, charges begin or increase after the trial unless the customer stops them.
This is different from an installment contract. If a customer buys a one-year software license and pays monthly, the monthly payments may be installments on an obligation for the entire year. The agreement may also renew automatically at the end of that year. Cancelling the renewal can stop the next year from beginning, but it does not necessarily erase the obligation for the first year. The distinction matters because a rule about stopping a negative-option feature is not automatically a rule allowing a customer to walk away from every promise in a broader contract.
The consumer-protection problem arises at the gap between consent and exit. A recurring arrangement can be valuable: it gives sellers more predictable revenue and can give customers convenience, lower transaction costs, or a chance to try a service before committing. But those benefits depend on meaningful choice. If the initial offer hides the recurring feature, if the seller charges without informed consent, or if cancellation is much harder than enrollment, silence stops functioning as a considered choice. It becomes a mechanism for keeping payments in motion.
That is why cancellation symmetry became the central idea behind the FTC’s 2024 amendment. The rule would have required a simple way to cancel the negative-option feature, avoid charges or increases, and immediately stop recurring charges. The cancellation mechanism would have had to be at least as easy to use as the mechanism used to consent. The popular shorthand was “click to cancel,” but the legal idea was broader: an exit should not impose a distinctly greater burden than the entry that created the recurring relationship.
What the vacatur changed—and what it did not
The FTC’s 2024 amendment was an attempt to turn that principle into one nationwide framework. It applied to negative-option programs in any medium, including online, telephone, print, and in-person transactions. It prohibited material misrepresentations, required important terms to be disclosed before billing information was obtained, required express informed consent before charging, and required a simple cancellation mechanism. The final text also included medium-specific rules: online cancellation had to be easy to find and could not require a live or virtual representative when no representative had been involved in enrollment; telephone cancellation had to be promptly effectuated through a number available during normal business hours; and in-person enrollment had to have a practical remote alternative.
The rule was published with an effective date of January 14, 2025. The compliance date for its central disclosure, consent, and cancellation provisions was initially May 14, 2025 and was later extended to July 14. But those dates no longer make the 2024 rule an operative nationwide standard. On July 8, 2025, the Eighth Circuit decided Custom Communications, Inc. v. FTC and vacated the rule in its entirety.
The reason was procedural. Under section 22 of the FTC Act, the court held, the FTC had to issue a preliminary regulatory analysis when it published a notice of proposed rulemaking, once the statutory economic threshold applied. That analysis had to describe reasonable alternatives and assess the projected benefits, adverse effects, other effects, and effectiveness of the proposal and each alternative. The FTC initially estimated that the proposed amendment would not cross the threshold. During the later informal hearing, however, an administrative law judge found that the rule’s annual effect on the national economy would meet or exceed $100 million. The FTC then issued a final rule and a final regulatory analysis, but it did not issue the required preliminary analysis.
The court rejected the argument that the late cost finding excused the omission. Once the threshold was shown to apply, the agency could have reissued the proposal with the required analysis and allowed the public to respond. The court also rejected the idea that the missing step was harmless merely because businesses had commented elsewhere. An earlier preliminary analysis could have given them a meaningful chance to challenge the rule’s scope, propose less burdensome alternatives, question the evidence of industry-wide prevalence, and contest the FTC’s cost assumptions before the agency settled on the final design.
That holding is narrower—and more consequential—than saying that easy cancellation is unlawful. The Eighth Circuit did not decide whether the FTC had satisfied the statutory requirements that a trade rule define unfair or deceptive practices with specificity and address practices the agency had reason to believe were prevalent. It did not decide whether the rule was arbitrary and capricious. Because the procedural defect was enough to resolve the case, those substantive questions remained open.
The court nevertheless vacated the whole amendment. It acknowledged that the rule contained a severability clause, but concluded that partial or party-specific relief was not feasible given the breadth of the framework and the prejudice caused by the procedural failure. The FTC’s March 2026 advance notice of proposed rulemaking states that this vacatur reinstated the prior version of the rule, which was first promulgated in 1973.
So “vacated” has two meanings that must be kept apart. The detailed 2024 standard is no longer the rule that regulated businesses must follow as such. But the decision did not wipe away section 5 of the FTC Act, ROSCA, the Telemarketing Sales Rule, state automatic-renewal statutes, or other protections against deceptive or unauthorized billing. Nor did it decide that the conduct targeted by the 2024 amendment is acceptable.
The map for what comes next
The restored 1973 rule is much narrower than the 2024 amendment. It covers prenotification plans for goods and requires clear disclosures about matters such as how to reject a selection, minimum purchase obligations, cancellation rights, shipping charges, rejection periods, and the frequency of notices. It does not, by itself, reach the full range of modern automatic renewals, continuity services, or free-trial conversions.
Other authorities fill parts of that space. Section 5 supplies a broad prohibition on unfair or deceptive acts and practices. The FTC describes its baseline principles as disclosing material terms clearly and before agreement, obtaining consent, honoring promised cancellation procedures, avoiding unreasonable barriers, and not making material misrepresentations. The exact legal assessment remains fact-specific: the claim made, the advertisement’s overall impression, the customer’s likely understanding, and the seller’s practices all matter.
ROSCA supplies a more focused online baseline. It generally bars charging through an internet negative option unless the seller clearly and conspicuously discloses all material terms before obtaining billing information, obtains express informed consent, and provides simple mechanisms to stop recurring charges. But ROSCA does not spell out every step of a simple cancellation process. The Telemarketing Sales Rule supplies more specific disclosure and payment requirements for telephone offers. EFTA and postal law address particular payment and merchandise practices. State laws may add stronger or different requirements.
The result is not “no law.” It is a legal map whose answer depends on the plan, the medium, the conduct, and sometimes the parties involved. An online trial may raise ROSCA and section 5 questions. A telephone enrollment may also implicate the Telemarketing Sales Rule. An in-person gym membership may be outside ROSCA and the TSR, leaving section 5 and state law especially important. A business using a third-party platform cannot assume that outsourcing the subscription interface automatically resolves responsibility; the 2024 FTC analysis rejected blanket exemptions, while the 2026 inquiry asks for more evidence about how such providers affect compliance.
The FTC’s March 13, 2026 ANPRM shows why the issue remains active. It reports that complaints rose from at least 33 per day in late 2020 to more than 90 per day in 2025, across all 50 states, dozens of industries, and hundreds of companies. It also reports new cases and settlements after the vacatur. Those are agency-reported indicators of continuing concern, not proof that every seller or industry is violating the law. The same caution applies to the 2024 rule’s economic estimates: the FTC modeled large consumer benefits from faster cancellation, but its calculations depended on assumptions about subscription prevalence, churn, cancellation times, and the number and behavior of sellers.
The ANPRM therefore asks questions rather than imposing a replacement. Should the FTC retain the 1973 rule, amend it, create a new rule, adopt some provisions of the vacated framework, or rely more heavily on education and enforcement? What evidence shows that a practice is prevalent? How much do cancellation barriers cost consumers, and how much would compliance cost small businesses? Should reminders, limits on retention offers, industry exemptions, or special treatment for negotiated business contracts return in some form?
The immediate answer to the title question is consequently precise but not simple: the 2024 click-to-cancel rule was vacated because the FTC skipped a required preliminary stage in its rulemaking, not because the court declared cancellation barriers harmless. The legal protections that existed before the amendment remain in their separate lanes, while the uniform equal-exit standard has returned to the status of a policy design the FTC may try to rebuild. Understanding that difference is the starting point for understanding every cancellation dispute that follows.