Federal subscription rules from the FTC changed sharply in 2025 and 2026. The agency’s 2024 Click-to-Cancel rule, which would have set a single standard for sign-ups and cancellations across the subscription economy, was vacated by the Eighth Circuit in July 2025 and formally withdrawn in February 2026. Consumers and businesses now operate under an older patchwork: the Restore Online Shoppers’ Confidence Act, the Telemarketing Sales Rule, Section 5 of the FTC Act, a narrow 1973 rule aimed at book clubs, and a growing set of state laws. Penalties reach $53,088 per violation.
Where the Rules Stand Now
The FTC finalized its Click-to-Cancel amendments to the Negative Option Rule in October 2024. The rule would have applied to nearly all recurring-payment programs, required separate consent to recurring charges, and mandated that canceling be no harder than signing up. It never took effect.
In Custom Communications, Inc. v. Federal Trade Commission, the Eighth Circuit vacated the entire rule in July 2025. The court found that the FTC skipped a preliminary regulatory analysis required whenever a proposed rule would have an annual economic effect of $100 million or more, and treated that omission as more than a technicality: affected businesses had lost a meaningful chance to argue for less burdensome alternatives.1U.S. Court of Appeals for the Eighth Circuit. Custom Communications Inc. v. Federal Trade Commission
On February 12, 2026, the FTC formally withdrew the 2024 amendments, restoring the Negative Option Rule to its original 1973 form.2Federal Trade Commission. Revision of the Negative Option Rule, Withdrawal of the CARS Rule, Removal of the Non-Compete Rule To Conform These Rules to Federal Court Decisions That original rule, codified at 16 CFR Part 425, reaches only “prenotification negative option plans” — the classic book-of-the-month-club model, where a seller periodically announces a selection and ships it unless the customer declines. Streaming services, software licenses, gym memberships, and meal kits fall outside it.3eCFR. 16 CFR Part 425 – Use of Prenotification Negative Option Plans
ROSCA: The Main Federal Law for Online Subscriptions
For online subscriptions, the strongest federal protection is the Restore Online Shoppers’ Confidence Act. Congress passed ROSCA in 2010, so the Eighth Circuit ruling did not touch it. Any business that charges recurring fees through an online transaction must meet three requirements:
- Disclose all material terms of the transaction clearly and conspicuously before collecting billing information.
- Obtain the consumer’s express informed consent before charging their account.
- Provide a simple mechanism for the consumer to stop recurring charges.4Congress.gov. Restore Online Shoppers’ Confidence Act – Public Law 111-345
The FTC has interpreted the “simple mechanisms” requirement to mean that canceling should be at least as easy as signing up. That interpretation still sits in the agency’s enforcement policy statement even though the Click-to-Cancel regulation was struck down.5Federal Trade Commission. Enforcement Policy Statement Regarding Negative Option Marketing
ROSCA’s protections are broad but deliberately general. The statute does not spell out how many clicks a cancellation can take, whether a company can present retention offers during the process, or what counts as conspicuous disclosure on a mobile screen. Those specifics were what the 2024 rule tried to codify. Without it, enforcement turns on whether a court or the FTC concludes a company’s practices violate ROSCA’s general standards, one case at a time.
Subscriptions Sold by Phone
Telephone sales fall under the FTC’s Telemarketing Sales Rule. Sellers offering a negative option feature by phone must clearly disclose that the customer’s account will be charged unless they act to cancel, the dates the charges will hit, and the specific steps to avoid future charges. Misrepresenting any of those details is prohibited.6Federal Trade Commission. Complying with the Telemarketing Sales Rule
Free-to-pay conversions carry extra requirements when the seller already has the consumer’s payment information. The entire call must be audio-recorded, and the seller must obtain at least the last four digits of the account to be charged along with express agreement to the charges. Written confirmation alone does not satisfy the authorization requirement for these transactions.
Section 5: The Catch-All
Section 5 of the FTC Act gives the agency broad authority to challenge unfair or deceptive practices, whether or not a targeted rule exists. A subscription company that hides material terms, blocks cancellation, or bills consumers without proper consent can face an enforcement action on that basis alone.7Federal Trade Commission. A Brief Overview of the Federal Trade Commission’s Investigative and Law Enforcement Authority
Section 5 enforcement is flexible but less predictable than a checklist rule. The FTC brought numerous subscription cases before Click-to-Cancel existed, and the loss of that rule does not eliminate its ability to act on egregious conduct. The remedies include administrative cease-and-desist orders and federal court injunctions.
State Automatic Renewal Laws
State law fills many of the gaps. California, New York, and Massachusetts have passed automatic-renewal laws with requirements similar to what the FTC’s vacated rule would have imposed: clear disclosure of subscription terms before enrollment, affirmative consumer consent, and straightforward cancellation procedures.
The specifics differ by state. Some require renewal reminders before charging, some mandate a cooling-off period after sign-up (a few days up to about two weeks in some jurisdictions), and some carry their own penalties. Because these laws operate independently of federal regulation, the Eighth Circuit decision did not affect them. If you subscribe to a service in one of these states, you may have protections federal law currently does not provide.
Penalties for Violations
Violations of FTC rules and orders carry civil penalties adjusted annually for inflation. As of January 2025, the maximum penalty is $53,088 per individual violation. That figure applies to violations of FTC trade regulation rules (including the Negative Option Rule), consent orders, and other enforceable FTC directives.8eCFR. 16 CFR 1.98 – Adjustment of Civil Monetary Penalty Amounts
The per-violation structure matters. If a company charges a thousand consumers without proper consent, each unauthorized charge can count as a separate violation. ROSCA violations are enforced under the same penalty framework, and state attorneys general can also bring ROSCA actions in federal court, adding another layer of exposure for companies that cut corners.
What’s Coming Next
The FTC is not finished with subscription regulation. On January 30, 2026, the agency submitted a draft Advance Notice of Proposed Rulemaking to the Office of Management and Budget. The ANPRM asks whether the agency should modernize the Negative Option Rule, readopt provisions from the vacated 2024 rule, or pursue alternatives like consumer and business education. The Commission approved the submission by a 2-0 vote.9Federal Trade Commission. FTC Submits Draft ANPRM Related to Negative Option Plans to OMB Review
An ANPRM is the earliest stage of federal rulemaking. Once OMB completes its review, the FTC will publish the notice and open a public comment period. Any final rule would likely be years away. The agency would need to complete the preliminary regulatory analysis it skipped the first time, respond to industry concerns about economic impact, and survive further legal challenges. Until then, ROSCA, the Telemarketing Sales Rule, Section 5, and state laws remain the operative framework.