Click-to-Cancel vacated: What’s next for businesses?

This summer, in Custom Communications Inc. v. Federal Trade Commission, the Eighth Circuit struck down the FTC’s amended Negative Option Rule (commonly known as the “Click-to-Cancel” Rule) on procedural grounds. The rule aimed to protect consumers from deceptive subscription practices by requiring clear disclosures, informed consent, and easy cancellation processes, including allowing customers to cancel using the same method they used to enroll.

Implications of the ruling

While the Click-to-Cancel Rule has been vacated and is no longer enforceable, the FTC still retains authority to pursue unfair or deceptive subscription practices under its existing statutory framework, including Sections 5 and 18 of the FTC Act. Although the agency may attempt to revive the rule, it may not need to, given the increasingly robust network of state and federal laws that either replicate or enhance the protections the rule aimed to establish.

State laws governing automatic renewals

Some states have implemented or amended similar laws, some of which mirror (and may exceed) the vacated Click-to-Cancel Rule rule’s standards, including these examples:

• California’s Automatic Renewal Law, as amended by Assembly Bill 2863, took effect July 1, 2025, and imposes stringent requirements that are more strict than the now-vacated FTC rule. These include express affirmative consent to automatic renewal or continuous service terms (including disclosures about cancellation policy, recurring charges, term length, and minimum purchase obligations); clear and conspicuous pre-enrollment disclosures near the request for consent; channel-specific cancellation options requiring cancellation be available through the same medium used to sign up or interact with the business; and a mandatory click-to-cancel mechanism for online subscriptions. The law also prohibits material misrepresentations and requires businesses to retain verification of consent for up to three years.
• Colorado passed its Online Cancellation of Automatic Renewal Contracts Act, which requires a simple, prominently displayed online cancellation option for consumers who signed up online.
• Delaware’s Consumer Contracts Code requires sellers to provide clear, conspicuous disclosures of automatic renewal terms at the time the contract is entered into, requires reminder notices for contracts that renew or extend beyond 12 months, cancellation deadlines, and simple instructions for cancellation. If the contract was entered online, sellers must provide an online cancellation method.
• Idaho’s Consumer Protection Act requires sellers to clearly disclose renewal terms and provide cost-effectively, timely, and easy to use cancellation methods, including a free online option. For subscriptions 12 months or longer, sellers must send renewal notices 30–60 days in advance that describe the goods/services, price, and cancellation instructions.
• Illinois amended its Automatic Contract Renewal Act to strengthen consumer protections. Key updates include mandatory pre-contract disclosures, affirmative consent before charging, acknowledgment of renewal terms, and advance notice requirements for free trials and contracts. Businesses must also offer simple mechanisms for cancelling the contract that matches the medium used by the consumer (e.g., online cancellation for online sign ups).
• Massachusetts’ forthcoming Junk Fee Regulations are effective September 2, 2025, and require clear and conspicuous disclosure of total prices, recurring charges, and cancellation terms throughout the entire purchasing process.
• Minnesota’s Consumer’s Right to Terminate statute requires annual notices for continuous service agreements and advance notice of the option to cancel for free trials lasting over 30 days. The notices must clearly explain the contract’s terms (including renewal provisions) and provide easy cancellation processes. Consumers may cancel by any reasonable means at no cost if such required confirmations or notices are not provided.
• New York revised its Prohibited Service Offer Practices law, with changes taking effect on November 5, 2025, to enhance transparency and consumer control over subscription services. The updated provisions require affirmative consumer consent or the option to cancel the service before any price increases, advance notification of material changes to service terms, and cancellation options that must be accessible through the same channels consumers used to enroll. The law also emphasizes clear presentation of renewal terms and cancellation procedures. For free trials, consumers must be able to cancel before being charged, and advance notice is required for renewals of one year or more.
• North Dakota’s Century Code was amended in 2023 to include provisions requiring sellers to present renewal terms clearly and conspicuously in advance of renewal, provide written notice 30–60 days before renewal for contracts over six months, and provide simple, timely, and cost-effective cancellation procedures. Failure to comply renders the contract unenforceable.
• South Carolina amended its Service Contracts law in 2024 to require sellers to notify consumers 30–60 days before automatically renewing certain service contracts. Notices must include renewal terms, charges, and a simple cancellation option.
• Vermont's Automatic Renewal Law requires a “double opt-in” for contracts with an initial term of one year or more that renew for more than one month. Sellers must provide clear, bold-face disclosures, obtain affirmative opt-in, and send reminder notices 30–60 days before renewal with cancellation instructions.
• Virginia’s law governing automatic renewals (including continuous service) applies to both consumers and small businesses, requiring affirmative consent, clear disclosures, and simple cancellation methods. For contracts renewing for more than 12 months, notice must be sent 30–60 days before renewal, and free trials over 30 days require cancellation reminders.
• Washington DC’s Automatic Renewal Protections Act requires clear disclosures of renewal and cancellation terms. For contracts of 12 months or more with automatic renewal provisions, businesses must send renewal notices 30–60 days in advance, both initially and annually. Free trials of one month or more also require separate affirmative consent before any charges are made.

Federal laws governing automatic renewals

• The Restore Online Shoppers’ Confidence Act (ROSCA) regulates online transactions using negative option features, like auto-renewing subscriptions. It requires companies to clearly disclose renewal terms before collecting payment, obtain explicit consumer consent, and provide a simple, reasonable means for consumers to cancel their contracts. The FTC actively enforces ROSCA, often imposing substantial penalties, and state authorities can also take action under the law, expanding its enforcement reach.

Cancellation policies: Dos and don’ts for subscription-based brands

• Maintain compliance with existing federal laws: Although the Click-to-Cancel Rule has been overturned, businesses offering subscriptions must still comply with existing rules and regulations prohibiting unfair or deceptive acts or practices.
• Stay informed about regulatory changes: It’s important to stay proactive by working with legal counsel who can monitor FTC rulemaking, appeals, and evolving state laws that may impact your cancellation processes. Document compliance throughout.
• Assess Click-to-Cancel compliance efforts; avoid unscrupulous practices: If your company began updating systems to meet the now defunct rule, consider maintaining those improvements. Many state laws already require similar consumer friendly features and rolling back changes could increase enforcement risk. Avoid tactics that obscure cancellation options, auto-renew without clear consent, or make cancellation unnecessarily difficult—these remain high risk and could trigger regulatory scrutiny and consumer frustration.
• Turn compliance into a competitive advantage: Transparent and user friendly cancellation processes are more than a compliance requirement—they’re a strategic asset. Poor cancellation experiences can not only trigger regulatory scrutiny but also erode customer trust and loyalty. By making cancellation simple and clear, businesses can reduce customer attrition, attract new customers, and strengthen brand reputation. These practices also help minimize support requests, boost conversion rates by fostering consumer confidence, and differentiate the brand in a crowded market through a reputation for fairness and transparency.

Navigating compliance and building consumer trust

In the wake of the decision to vacate the Click-to-Cancel Rule, businesses must stay on top of their compliance efforts, balancing federal requirements with a complex landscape of state laws governing subscription practices. While the immediate risk of Click-to-Cancel’s implementation deadline has waned, the importance of transparent, consumer-friendly cancellation policies cannot be overstated. After all, consumer trust and goodwill translates to a long-term subscription base and valued customers that are too valuable to lose over frustrating sales tactics. Nixon Peabody’s Advertising, Promotions & Rights of Publicity and Consumer Industry attorneys are uniquely positioned to help your business navigate these evolving legal requirements and maintain a competitive edge in the marketplace. For more information on the content of this alert, please contact your Nixon Peabody attorney or the author of this article, Christina Chang.