FTC Postpones Enforcement of Biden Admin’s ‘Click-to-Cancel’ Rule

The rule is facing legal challenges from industry groups, who allege that the FTC overstepped its authority by imposing an overly broad regulation.

A view of signage at the Federal Trade Commission (FTC) headquarters in Washington on Nov. 24, 2024. Benoit Tessier/Reuters

The Federal Trade Commission (FTC) is postponing a rule expected to make it easier for consumers to cancel subscription services and memberships, giving businesses additional time to comply.

On Friday, the FTC said it will it would delay enforcement of the “Click to Cancel” rule, formally known as the Negative Option Rule, by 60 days, pushing the compliance deadline to July 14, 2025.

The rule was unveiled in October 2024 and went into effect on Jan. 19, 2025. It requires businesses obtain a consumer’s express, informed consent before enrolling them in a “negative-option” program where a lack of action is treated as agreement, such as free trials that automatically converts into paid subscription unless canceled or pre-checked boxes that add services unless manually unchecked.

More importantly, the rule mandates that canceling a subscription must be as simple as signing up. For example, companies may not require customers to speak with a representative by phone or in person to cancel, unless that was how the customers signed up in the first place. Companies must also “clearly and conspicuously” present cancellation terms before collecting any payment information.

Noncompliance will be treated as an unfair or deceptive practice, and the FTC may seek civil penalties of up to $53,088 per violation.

Enforcement of some provisions of the rule had already been postponed to May 14 under the Biden administration. The now Trump-led FTC noted that while the previous administration did not explain why that specific timeline was chosen, the decision itself apparently shows that compliance “entailed some level of difficulty.”

“Having conducted a fresh assessment of the burdens that forcing compliance by this date would impose, the Commission has determined that the original deferral period insufficiently accounted for the complexity of compliance,” the FTC said Friday, following a 3–0 vote in favor of the 60-day delay.

The FTC typically consists of five commissioners, three from the sitting president’s party and two from the opposition. President Donald Trump fired the two Democratic commissioners in March, leaving only three Republican members.

Ongoing Legal Challenges

The rule has been praised by consumer advocacy organizations but faces strong resistance from industry groups. Trade associations representing advertisers, news publishers, internet and cable providers, home security companies, and other sectors have filed four separate lawsuits challenging the rule’s legality in the Fifth, Sixth, Eighth, and Eleventh Circuit Courts of Appeals.

Those cases have since been consolidated in the Eighth Circuit in St. Louis. In January, the court denied a request to halt the rule while the litigation proceeds.

The petitioners accuse the FTC of overstepping its authority by pushing one-size-fits-all requirements that would override and extend beyond more narrowly tailored laws passed by Congress. They also argue that having a multi-step cancellation process actually benefits consumers by offering opportunities for better deals and protecting against accidental or unwanted cancellations.

“Many companies need to ensure that malicious actors are not wrongfully cancelling a security, fire, medical, or other sensitive service,” the U.S. Chamber of Commerce wrote in a brief to the court. “But if the service allowed a customer to sign up by an email contract or similar online mechanism, then the Rule would restrict the company in having a representative speak with the customer to verify the customer’s identity.”

The rule was introduced by former FTC Chair Lina Khan, a Democrat, as part of President Joe Biden’s election-year initiative to crack down on what he called “junk fees.” It was approved in a 3–2 vote, with both Republican commissioners voting against it.

It remains unclear whether the Trump-led FTC will continue to defend the Biden-era rule, seek to amend it, or rescind it altogether. In Friday’s announcement, the agency did say it will monitor the rule’s impact once implemented and consider changes if necessary.

“Of course, if that enforcement experience exposes problems with the Rule, the Commission is open to amending the Rule to address any such problems,” it said.