A federal appeals court last month blocked the Federal Trade Commission’s ‘Click to Cancel’ regulation, which would force companies to make subscription cancellations as straightforward as sign-ups in the US.
However, three Democrat lawmakers in Washington have now introduced a new bill in Congress in an attempt to codify the FTC ruling.
Congressmen Brad Sherman, Seth Magaziner, and Chris Deluzio’s new bill would write the FTC’s stalled “Negative Option” rule directly into federal law, bypassing regulatory hurdles.
The FTC initially approved the ‘Click to Cancel’ rule in October 2024, requiring companies to simplify their cancellation processes to match the ease of signing up.
It would have forced music streaming giants like Netflix, Spotify, Apple Music, and Amazon Music to ensure that the process for cancelling a subscription is at least as simple as the process for signing up.
The Commission finalized the regulation after receiving over 16,000 public comments, aimed to crack down on what the FTC called “deceptive practices” in subscription services. Under the rule — which represented an n update to the FTC’s 1973 Negative Option Rule — companies would have been prohibited from charging consumers without informed consent and required to clearly disclose terms before collecting billing information.
However, the US Court of Appeals for the Eighth Circuit vacated the rule on July 8, citing “procedural error” in the FTC’s rulemaking process. The rule was set to take effect on July 14.
The court found that the FTC failed to conduct a required preliminary regulatory analysis for rules with economic impacts exceeding $100 million annually.
It wrote: “[T]he [Administrative Law Judge] found that the proposed rule would have an annual effect on the national economy surpassing the $100 million threshold.”
“This legislation would ensure that auto-renew subscription services are transparent, easy to cancel, and required to gain explicit consent from the consumer before they are charged for services.”
Brad Sherman, US Representative for California’s 32nd District
Congressman Sherman said: “This legislation would ensure that auto-renew subscription services are transparent, easy to cancel, and required to gain explicit consent from the consumer before they are charged for services.”
“Too many people are stuck paying for monthly subscriptions they don’t want, and that companies make nearly impossible to cancel.”
Seth Magaziner, US Representative For Rhode Island‘s 2nd District
Congressman Magaziner said: “Too many people are stuck paying for monthly subscriptions they don’t want, and that companies make nearly impossible to cancel. I am proud to lead legislation to make it easier to cancel recurring payments and put power back in the hands of everyday people who work hard for their money.”
Meanwhile, Senator Ruben Gallego has introduced companion legislation in the Senate. He said: “Subscriptions are Corporate America’s new favorite way to try and rip people off, and it’s driving people crazy that they can’t easily cancel.”
“Cancelling subscriptions should not be full of tricks and traps that waste hard-earned time and money—cancelling should be just as easy as signing up. That’s what the ‘Click to Cancel’ policy from former FTC Chair Lina Khan was all about, and I’m proud to co-lead the bill in the House of Representatives to make it law. Congress should act now to pass this and save people money.”
“Cancelling subscriptions should not be full of tricks and traps that waste hard-earned time and money—cancelling should be just as easy as signing up.”
Ruben Gallego, US Senator for Arizona
The original FTC rule was part of the Biden administration’s “Time is Money” initiative, launched last year to address consumer frustrations.
The rule was met with opposition from the US Chamber of Commerce and major subscription industry players including Charter Communications, Comcast, Cox Communications, Disney Entertainment and Warner Bros. Discovery.
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