Court Blocks Click-to-Cancel Rule

A federal appeals court has blocked a click-to-cancel rule that would have required businesses to make it easy for consumers to cancel unwanted subscriptions and memberships, just days before it was set to go into effect.

The Federal Trade Commission's rule would have required businesses to obtain customers' consent before charging for memberships, auto-renewals, and similar programs; to disclose when free trials or other promotional offers will end; and to simplify the process for customers to cancel recurring subscriptions.

The FTC rule, enacted during the Biden administration as part of the "Time is Money" initiative, was set to go into effect on July 14, but the U.S. Court of Appeals for the Eighth Circuit decided to vacate the rule citing a procedural error.

The FTC rule sent many subscription-based companies into a panic, but many industry insiders warned that it's just bad business to try to lock in dissatisfied customers.

"It costs [nothing] for a consumer to switch brands. And in 2025, customers will not tolerate hard-to-cancel subscriptions and billing confusion. To keep customers in 2025, brands need to focus on building an upstream experience strong enough that customers don’t even consider canceling," said  Katie Costanzo, president of customer experience at CSG.

"That's a tall order. Especially when customers are tightening their belts and looking for ways to eliminate excess subscriptions, loyalty in 2025 will require brands to raise the bar in offering trust, value, and transparency," she continued. "To do so, brands need to understand customers on a deeper level, build empathy, and be easy to do business with. Rather than trapping customers in confusing processes or overwhelming them with excessive communications, find every opportunity to make their experience effortless."