The FTC's amended Negative Option Rule, known as click to cancel, was finalized on 16 October 2024 and required cancellation to be at least as easy as sign-up. In July 2025 the Eighth Circuit Court of Appeals vacated it on procedural grounds, so it never took effect. But the FTC kept enforcing the same principles under existing law, including a $2.5 billion Amazon Prime settlement in September 2025.
Key takeaways
- The rule was finalized on 16 October 2024, with penalties of up to $53,088 per violation.
- In July 2025 the Eighth Circuit vacated it entirely, because the FTC skipped a required preliminary regulatory analysis. It didn't rule on the substance.
- Enforcement continued under the FTC Act and ROSCA: Amazon ($2.5 billion, Sep 2025), Uber One (sued Apr 2025) and Adobe ($150 million, Mar 2026).
- On 30 January 2026 the FTC restarted rulemaking, and several states have their own click-to-cancel laws.
Columbia House had a brilliant offer. A dozen records for a penny.
People snapped it up. What many didn't realize was that they'd signed up for a subscription, and the next records would arrive at full price.
In The Subscription Playbook I put Columbia's eventual failure down to one word: greed. Too much focus on getting customers in, not enough on treating the ones it had well. (Here's how Columbia House finally ran out of road.)
Decades later, the US Federal Trade Commission tried to write a rule against exactly that kind of trap.
It lost in court. And it didn't matter.
What did the click-to-cancel rule say?
On 16 October 2024 the FTC finalized its amended Negative Option Rule, nicknamed "Click to Cancel."
It was broad. It would have applied to almost every subscription and auto-renewal, business-to-business as well as business-to-consumer, online and in person. It required:
- clear disclosure of the terms;
- "unambiguously affirmative consent" to the subscription;
- a cancellation method "at least as easy to use" as the sign-up. If people could sign up online, they had to be able to cancel online.
Penalties ran up to $53,088 per violation.
Why did the court strike it down?
Not because of what it said. Because of how it was made.
In July 2025, the US Court of Appeals for the Eighth Circuit vacated the rule in its entirety. The court found the FTC had skipped a required procedural step: a preliminary regulatory analysis, which was needed because the rule's economic impact passed the threshold for major rules.
The rule never took effect.
Why did it change nothing?
Because the principles were already law, just spread across older statutes.
The FTC kept enforcing them under the FTC Act and the Restore Online Shoppers' Confidence Act (ROSCA) of 2010. Look at what happened after the "win":
| Date | What happened |
|---|---|
| 16 October 2024 | FTC finalizes the click-to-cancel rule |
| April 2025 | FTC sues Uber over Uber One (amended with 21 states in December 2025) |
| July 2025 | Eighth Circuit vacates the rule |
| September 2025 | Amazon Prime settlement: $2.5 billion |
| 30 January 2026 | FTC sends a draft advance notice of proposed rulemaking on negative option plans to the White House budget office, restarting the process |
| 13 March 2026 | Adobe settlement: $150 million |
Several states, including California, New York and Massachusetts, have their own click-to-cancel style laws too.
So the businesses that celebrated in July 2025 misread the moment. The rule died. The enforcement didn't. You can read the details in how Amazon Prime paid $2.5 billion, the Uber One story and how Adobe's hidden cancellation fee cost it $150 million.
My take
At my previous software company, we ran a weekly "Voice of the Customer" meeting, where the customer success team went through every reason customers left that week, with every department in the room. You can't do that if your cancellation flow is a maze. Customers who can't leave don't give you feedback. They give you chargebacks. Easy cancellation isn't just compliance. It's how you learn.
Would your cancellation flow pass?
Check your sign-up and cancellation flow against the new Australian rules, which follow the same easy-in, easy-out principle.
Is easy cancellation now the norm everywhere?
Pretty much.
- UK: The Digital Markets, Competition and Consumers Act adds reminder notices and two cooling-off periods, for contracts from January 2027. See how the UK gave every subscriber two chances to change their mind.
- Australia: As at October 2026, the law says that from 1 July 2027 subscription businesses must provide a way to cancel that's easy to find and straightforward, and online if customers can sign up online. See Australia's subscription trap laws.
- US: No single federal rule as at October 2026, but active case-by-case enforcement, state laws, and a restarted rulemaking.
Different laws. Same direction. Easy in, easy out.
Doesn't easy cancellation increase churn?
In the short term, it can. Some customers who'd have stayed out of inertia will leave.
But think about what that churn was. Customers who weren't using you, didn't value you, and would have left the moment they found the button. That revenue was never safe. It was hidden. And it often came back as complaints, chargebacks and bad reviews.
The better question is: why aren't those customers getting value? That's what the book's chapter on reducing churn is about. Run your offer through the churn risk checklist to find where customers are likely to leave once leaving is easy.
What can you steal from the click-to-cancel saga?
- Match the exit to the entrance. If customers can join online, let them cancel online in a few clicks.
- Get explicit consent to auto-renewal. A separate tick-box, not a pre-ticked box or fine print.
- Offer one save, then honor the cancellation. Pause, downgrade or a discount. Once.
- Ask why they're leaving. A short exit survey turns cancellations into product feedback.
- Design for the strictest market you sell in. One clean flow is cheaper than three compliant ones.
The cancellation flow guide shows how to build a save flow on the same easy-in, easy-out principle all three markets share. Check the local rules for each market you sell in.
What to do next
Sign up for your own product as a new customer. Then try to cancel. Time it. Count the clicks.
If it takes longer to leave than to join, fix that first.
AU Subscription Compliance CheckerCheck your sign-up and cancellation flow against the new Australian rules.Open the free tool →Frequently asked questions
Is click to cancel the law in the US?
Not as a single federal rule. The FTC's 2024 rule was vacated in July 2025 and never took effect. But the FTC still enforces similar requirements under the FTC Act and the Restore Online Shoppers' Confidence Act, and several states, including California, New York and Massachusetts, have their own laws. In practice, easy cancellation is expected.
What is ROSCA?
The Restore Online Shoppers' Confidence Act is a 2010 US federal law covering online sales with negative option features, such as auto-renewing subscriptions. It requires clear disclosure of material terms before billing, express informed consent, and a simple way to stop recurring charges. The FTC and the Department of Justice have used it in cases against Amazon, Uber and Adobe.
Does the US click-to-cancel approach affect Australian businesses?
If you sell to US customers, US federal and state rules can apply to those sales. For Australian customers, the relevant law is the Australian Consumer Law, plus the new subscription rules starting 1 July 2027, which require an easy, straightforward way to cancel, including online if customers can sign up online.
Can I still offer a save offer when someone cancels?
Generally yes, in most places, as long as it doesn't become an obstacle. Offer one save, such as a pause, downgrade or discount, then honor the cancellation if the customer still wants to go. Repeated offers, forced calls or confusing screens are what regulators object to.
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Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- FTC, Negative Option Rule page (final rule 16 Oct 2024)
- US Court of Appeals, Eighth Circuit, opinion (Jul 2025)
- Consumer Finance Monitor (Ballard Spahr), Eighth Circuit voids FTC 'Click to Cancel' rule (23 Jul 2025)
- WilmerHale, Eighth Circuit Vacates the FTC's 'Click to Cancel' Rule (1 Aug 2025)
- Crowell & Moring, FTC Moves to Revive 'Click-to-Cancel' Rule (2026)
- Gibson Dunn, FTC Restarts Negative Option Rulemaking After Eighth Circuit Vacatur (2026)
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.