No More Click to Cancel Rule—But FTC Enforcement Actions Keep Coming

The FTC’s much-anticipated “Click to Cancel” Rule was nixed, but the FTC is not backing down. The FTC continues to use Section 5 of the FTC Act and various other regulations to bring enforcement actions against companies that fail to provide clear and conspicuous disclosures about recurring charges and easy-to-cancel options for consumers. And many states have consumer protection laws prohibiting “unfair” and “abusive” practices in their arsenal to bring such enforcement actions. 

Thus, though the Rule did not survive, its intent is alive and well. Direct Sellers should audit their recurring charge disclosures and ensure that canceling is just as easy as signing up.

The Purpose of the “Click to Cancel” Rule

Since 1973, the FTC has enforced the Negative Option Rule, which was adopted to combat deceptive negative option practices from sellers such as magazine distributors. “Negative option” practices refer to sales tactics that infer a customer’s desire to continue a subscription or service from the consumer’s silence or failure to take affirmative action. These programs can take several forms, including continuity plans (where consumers receive periodic shipments or services until they cancel), automatic renewal plans (where subscriptions renew unless the consumer cancels), and free-to-pay plans (where consumers receive free or low-cost trials and are charged if they do not cancel). This marketing approach has become widespread across the direct sales industry, raising concerns about consumer confusion and the potential for unfair or deceptive practices.

In 2024, the FTC sought to amend the Negative Option Rule to apply to every form of negative-option marketing “in any media.” Nicknamed the “Click to Cancel” Rule, the amended Rule barred misrepresentation of material facts, mandated clear and conspicuous disclosure of all material terms, required sellers to obtain unambiguous affirmative consent to the negative option feature, and imposed a “simple cancellation mechanism” that had to be at least as easy to use as the method of enrollment (hence, click to cancel).

Industry groups, however, argued that the final Rule went beyond the FTC’s mandate, conflicted with existing state regulations, and ignored key procedural safeguards. Facing mounting pressure, the FTC decided in May 2025 to delay enforcement of the Rule by 60 days, citing “the complexity of compliance.” Then, just six days before the revised compliance deadline, the Eighth Circuit handed down its judgment vacating the entire Rule.

The FTC Continues Its Enforcement Efforts

Recent FTC actions and settlements show that even without the Rule, the FTC will exercise its authority under Section 5 of the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA), and other regulations to target businesses that fail to comply with the spirit and intent of the Rule.

Care.com experienced the FTC’s heightened focus on negative option subscriptions even before the Rule was scheduled to go into effect. In August 2024, the FTC alleged that Care.com violated the FTC Act and ROSCA by making it seemingly “impossible” for consumers to cancel their subscriptions and for failing to disclose material information about the subscription model before obtaining billing information. Care.com entered into a settlement with the FTC—almost a year before the Rule would have gone into effect—agreeing to pay $8.5 million for these violations (and others) and to implement the required disclosures and easy cancellation method.

And now, even after the Rule was vacated, the FTC’s heightened focus on this issue remains. In August 2025, the FTC obtained a settlement with direct seller, International Markets Live, Inc. (IML), its related entities, and certain executives for $36 million. This came following the FTC’s allegations that IML, among other things, failed to disclose all material terms related to purchasing one of its investment training programs prior to obtaining the consumer’s billing information and failed to obtain express consent before charging the consumer as part of a negative option feature. 

LA Fitness is also currently facing similar scrutiny. On August 20, 2025, the FTC filed a complaint against LA Fitness entities alleging their complicated, burdensome cancellation processes and aggressive attempts to deny cancellations violate the FTC Act and ROSCA. The FTC alleges LA Fitness is engaging in unfair and deceptive practices by: (1) burying information about the cancellation process on its website; (2) only allowing in-person cancellation and cancellation by mail; (3) making the cancellation process overly complicated by not allowing consumers to cancel via the mobile application or requiring that mail-in cancellations be sent certified or registered mail; (4) denying escalated cancellation requests or improperly continuing billing despite the consumer’s request. Time will tell whether this action ends in litigation or a settlement like IML.

One thing is for sure—these recent enforcement actions and settlements show the FTC’s continued focus on negative option practices. Direct Sellers should take heed and evaluate their own disclosures, billing, and cancellation practices with respect to their products, services, and marketing opportunities.

Winston & Strawn is here to help your organization navigate this ever-changing landscape.