FTC Postpones Enforcement of “Click-to-Cancel” Subscription Rule for 60 Days

The FTC Vote to Postpone and Accompanying Statement

On May 9, 2025, the Federal Trade Commission (“Commission”) voted 3-0 to delay the compliance deadline for its revised Negative Option Rule (“Rule”) for 60 days, from May 14 to July 14, 2025. In a brief statement accompanying the vote, the Commission explained that it had “conducted a fresh assessment of the burdens” of compliance with the Rule and determined that the original 180-day deferment “insufficiently accounted for the complexity of compliance.”

The Commission went on to say that, after it starts enforcing the rule on July 14, if its “enforcement experience exposes problems with the Rule,” the Commission was open to amending the Rule.

The Commission’s statement suggests that businesses should not expect any revision to or withdrawal of the Rule before the new July 14, 2025 compliance deadline, but such actions might be possible after enforcement has begun.

Pending Court Action to Challenge the Rule

One event that could upend that timetable, however, is the consolidated action pending in the US Court of Appeals for the Eighth Circuit, Custom Communications, Inc., et al. v. Federal Trade Commission, Case No. 24-3137, in which various industry groups are challenging the validity of the Rule. On January 17 of this year, the court denied the groups’ initial motion to stay the Rule pending further litigation of the issue. In subsequent filings on the plaintiffs’ motion to vacate the Rule, the Commission filed a robust brief defending the Rule, surprising some commentators who had expected the Trump Administration to continue its efforts to pull back on various regulatory actions taken at the end of the Biden Administration. The brief on its face signals the Commission’s intent to proceed with implementing the Rule, although we note that the Commission filed the brief before now-Chairman Andrew N. Ferguson had a majority of Republican appointees on the Commission. Briefing on the motion to vacate the Rule is now complete, but oral argument has not yet been scheduled. It is unclear whether a hearing, let alone a final decision, will take place before July 14.

Complaint Filed Against Uber

In the meantime, the Commission has been continuing to enforce the existing Negative Option Rule. On April 21, 2025, the Commission filed a complaint against Uber in the Northern District of California for violations of the Restore Online Shoppers Confidence Act (“ROSCA”), 15 U.S.C. § 8403, part of the Commission’s existing negative option regulatory regime. The Commission alleged in the complaint that Uber made “false or misleading claims” about its subscription service, failed to provide a simple method of cancellation, and charged customers without their consent. This enforcement action is consistent with continuing federal regulation in the area of automatic renewals.

Withdrawal of CFPB Negative Option “Circular”

One potential counterpoint to these enforcement efforts – admittedly from a different agency – is the May 12 announcement by the Consumer Financial Protection Bureau (CFPB) in the Federal Register (90 FR 20084) that it is withdrawing a number of guidance documents and policy statements, one of which is the Unlawful Negative Option Marketing Practices circular originally published on January 30, 2023 (88 FR 5727). The circular made clear the CFPB’s belief that it had jurisdiction to take action against deceptive or misleading automatic renewal and subscription practices under the Consumer Financial Protection Act (12 U.S.C. § 5481 et seq.). Acting CFPB Director Russell Vought said in the announcement that the CFPB’s current policy is “to avoid issuing guidance except where necessary and where compliance burdens would be reduced rather than increased.” At a minimum, this action indicates that the CFPB is less likely to complement or add to the Commission’s negative option enforcement efforts.

Takeaways

On balance, businesses should continue to prepare for enforcement of the revised Negative Option Rule, and take advantage of the 60-day reprieve to review their automatic renewal practices to ensure they are in compliance by July 14.

As a reminder, the key components of the revised Rule are:

• Disclosure of all material terms of any transaction involving a negative option feature (16 C.F.R. § 425.4(a));
• Clear and conspicuous disclosure of those terms immediately adjacent to and before obtaining the consumer’s consent to the negative option feature (16 C.F.R. § 425.4(b));
• Obtaining the consumer’s unambiguously affirmative consent to the negative option feature separately from any other portion of the transaction (16 C.F.R. § 425.5(a));
• A simple mechanism for cancellation of the negative option feature that is as easy to use as the original consent procedure, and is offered in the same medium as the consumer used to sign up (16 C.F.R. § 425.6(a)-(c)); and
• No misrepresentation of any material fact related to the transaction, whether the fact is related to the negative option feature or not (16 C.F.R. § 425.3).

While reviewing their procedures, businesses should also keep in mind that there are numerous states with automatic renewal compliance regimes, some of which have additional requirements not addressed in either the existing or revised FTC rule – such as original transaction confirmations, annual renewal reminders, and/or notices of material changes. A number of states have implemented or amended such laws in 2025, which will be the subject of a future Legal Update.