Canceled Before It Clicked: Eighth Circuit Strikes Down FTC's Click-to-Cancel Rule

Just days before it was set to take effect, the U.S. Court of Appeals for the Eighth Circuit struck down the Federal Trade Commission's (FTC) much anticipated "Click-to-Cancel Rule" (the "Rule"), delivering regulatory whiplash to companies that had proactively geared up for the Rule's arrival. As previously reported, the Rule sought to impose various requirements for subscription-based services, including clear and conspicuous disclosures, informed consent, and simple cancellation processes.

The Eighth Circuit's decision hinged on its finding of a procedural deficiency: namely, that the FTC failed to conduct a preliminary regulatory analysis, which is required when a proposed rule is expected to have an annual economic impact exceeding $100 million. The agency had estimated the impact would fall below that threshold, but an Administrative Law Judge (ALJ) later disagreed. The Eighth Circuit found that following the ALJ determination, the FTC should have conducted