Eighth Circuit Refuses to Stay Click-to-Cancel Rule

On January 17, 2025, the United States Court of Appeals for the Eighth Circuit denied a petition to administratively stay the effective date of the Federal Trade Commission’s controversial “Click-to-Cancel” Rule. A divided Federal Trade Commission voted 3-2 to approve the Rule on October 16, 2024. The Rule requires that any business that offers negative option marketing (including auto-renewal features) (1) clearly state the material terms of the offer, which may be quite lengthy, next to the space where the offeree must consent; (2) obtain proof of the consent; and (3) offer a means of cancellation that is at least as easy as the means of signing up (read our prior article on the topic here).

Immediately following the FTC’s vote, multiple challengers raced to federal courthouses with petitions to enjoin the rule. Through procedures applicable to multi-district litigation, those challenges were consolidated before the United States Court of Appeal for the Eighth Circuit in December 2024.

On January 17, 2025, the Eighth Circuit set a briefing schedule to consider the merits of the Rule, with the challengers’ initial brief due on February 14, 2025; the FTC’s response due on March 14, 2025; and the challengers’ reply due on April 4, 2025. At the same time, it denied the challengers’ initial petition, filed on December 5, 2024, to stay the Rule’s effect pending resolution of the lawsuit in the Eighth Circuit. That petition argued that the FTC had exceeded its authority and violated procedural requirements in enacting the Rule. It also argued that those subject to the Rule would be forced to incur unrecoverable compliance costs absent an administrative stay.

However, the Eighth Circuit refused to stay the Rule in a two-line order without explaining its reasoning.

This turn of events creates a compliance conundrum for businesses subject to the Rule. Even though the Eighth Circuit has not stopped the Rule from taking effect, it is unclear whether the FTC will proceed with enforcement while the case remains pending. If the FTC were to begin enforcing compliance with the Rule only to have the Eighth Circuit invalidate it, its time and effort would have been wasted. Further, the degree of support for the Rule within the FTC itself is difficult to gauge. Lina Khan, who was the chair of the FTC when the Rule was voted upon and one of its supporters, will no longer be an FTC commissioner as President Trump takes office. Andrew Ferguson — an FTC commissioner who voted against the Click-to-Cancel Rule — is slated to take over as chair under President Trump. Mark Meador is President Trump’s pick to fill the vacancy created by Chair Khan’s departure.

AGG will continue to monitor the progress of the challenge to the Click-to-Cancel Rule and developments in the FTC in light of the change of administration.