The FTC Negative Option Rule After Click-to-Cancel: What Was Vacated and What Part 425 Says Now

Three Versions of One Citation

A reader looking up 16 CFR Part 425 over the past two years would have found three different rules. Before January 14, 2025 it was the 1973 rule titled "Use of Prenotification Negative Option Plans," a short regulation of book-club style arrangements. From that date it was the amended rule the Commission had published at 89 FR 90476 on November 15, 2024, reaching recurring charges in any medium and commonly called the click-to-cancel rule. Since February 12, 2026 it has once more been the 1973 text, restored by the Commission at 91 FR 6507 after the amendments were vacated.

This post covers the text of the vacated amendments, the court's reasoning, the rule now in force, the statute that sits alongside it, and where the Commission's new rulemaking stood on September 14, 2026. The wider body of deceptive-design law is surveyed in our dark patterns guide.

What the 2024 Amendments Covered

The final rule was adopted by a 3-2 vote, with Commissioners Holyoak and Ferguson dissenting. It took effect on January 14, 2025, with a compliance date of May 14, 2025 for sections 425.4 through 425.6. Section 425.1 set its reach as "any form of negative option program in any media, including, but not limited to, Interactive Electronic Media, telephone, print, and in-person transactions."

Its central defined term, "Negative Option Feature," meant a contract provision "under which the consumer's silence or failure to take affirmative action to reject a good or service or to cancel the agreement is interpreted by the negative option seller as acceptance or continuing acceptance of the offer." Four forms were named: automatic renewals, continuity plans, free-to-pay or fee-to-pay conversions, and pre-notification plans. "Clear and Conspicuous" was defined in eight parts, one of which provided that in an interactive electronic medium such as a website or app "the disclosure must be unavoidable."

Misrepresentation, section 425.3

Section 425.3 made it a rule violation and a section 5 violation for a negative option seller to misrepresent "any Material fact," naming the feature's terms (including consumer consent, deadlines to avoid charges, and cancellation), cost, the purpose or efficacy of the underlying product, and health or safety.

Disclosure before billing, section 425.4

Section 425.4(a) required disclosure, before billing information was obtained, of all material terms "regardless of whether those terms directly relate to the Negative Option Feature." Four items were specified: that charges would occur or increase after a trial unless the consumer acted, each deadline for acting, the amount and frequency of charges, and the information needed to find the cancellation mechanism. Section 425.4(b) required those four to appear "immediately adjacent to the means of recording the consumer's consent," before consent was obtained, and without other information that "interferes with, detracts from, contradicts, or otherwise undermines" them.

Consent and record-keeping, section 425.5

Section 425.5(a) required express informed consent before charging, obtained "separately from any other portion of the transaction." Paragraph (a)(3) required verification of that consent to be kept "for at least three years," unless the seller could show by a preponderance of the evidence that its process made it technologically impossible to complete the transaction without consent. Paragraph (c) treated a check box, signature or similar method that the consumer "must affirmatively select or sign to accept the Negative Option Feature and no other portion of the transaction" as satisfying the rule for written and online offers. Paragraph (b) preserved the Telemarketing Sales Rule's own requirements, including audio recording of certain free-to-pay transactions using preacquired account information.

Cancellation, section 425.6

Section 425.6, captioned "Simple cancellation ('Click to Cancel')," required a mechanism to cancel the feature, avoid charges, and "immediately stop any recurring Charges," which had to be "at least as easy to use as the mechanism the consumer used to consent." At a minimum it had to be available through the medium used to consent. Online, it had to be "easy to find when the consumer seeks to cancel," and "[i]n no event shall a consumer be required to interact with a live or virtual representative (such as a chatbot) to cancel if the consumer did not do so to consent." A cancellation telephone line had to be answered or record messages during normal business hours and cost no more than the enrollment call. For in-person enrollment, an online or telephone route was also required.

Section 425.7 preserved state negative option laws except to the extent of inconsistency, treating greater state protection as consistent. Section 425.8 set up an exemption petition process, and section 425.9 declared the provisions severable.

Why the Eighth Circuit Vacated It

Industry groups and businesses petitioned for review in four circuits. The Judicial Panel on Multidistrict Litigation, by random selection, consolidated the petitions in the Eighth Circuit as Custom Communications, Inc. v. FTC, No. 24-3137. The court denied a stay. On May 9, 2025, the Commission used its enforcement discretion to defer the compliance deadline to July 14, 2025. The per curiam opinion of Judges Loken, Erickson and Kobes was filed on July 8, 2025, and is reported at 142 F.4th 1060.

The dispositive issue was section 22 of the FTC Act, 15 U.S.C. § 57b-3. When the Commission publishes a notice of proposed rulemaking it "shall issue a preliminary regulatory analysis" describing reasonable alternatives and their projected benefits and costs, but the requirement does not reach an amendment unless the Commission estimates an annual effect on the national economy of $100 million or more. In the April 2023 proposal the Commission "preliminarily determined" that the amendments would fall below that figure and issued no preliminary analysis.

An administrative law judge then held informal hearing sessions in January and February 2024. Using the Commission's estimate that 106,000 entities offered negative option features, the judge observed that compliance costs would exceed $100 million unless each business needed fewer than twenty-three hours of professional services at the lowest estimated hourly rates, and found the threshold would be exceeded. The Commission acknowledged the finding and published a final regulatory analysis with the rule, but never a preliminary one.

The court held that section 22 "required the Commission to issue a preliminary regulatory analysis after the ALJ found the Rule would meet the $100 million economic impact threshold, even though the Commission initially estimated it would not." It relied in part on the requirement that a final analysis summarize comments made "in response to the preliminary regulatory analysis," reasoning that without one "it is impossible for interested parties to submit comments" on it. On prejudice, the court found petitioners "lost a notable opportunity to dissuade the FTC," noting that the proposal's discussion of alternatives covered only free-trial consent and reminder requirements and that the final analysis's treatment of alternatives "was perfunctory." It drew support from the Fifth Circuit's vacatur of the Commission's CARS Rule in National Automobile Dealers Ass'n v. FTC, 127 F.4th 549 (5th Cir. 2025).

Two limits on the holding shaped what came next. Having found prejudicial procedural error, the court did not reach petitioners' arguments that the rule failed section 18's specificity and prevalence requirements or was arbitrary and capricious. And it vacated the entire rule despite the severability clause, stating that "vacatur of the entire Rule is appropriate in this case because of the prejudice suffered by Petitioners" and that "the party-specific vacatur requested by the Commission is not feasible."

What Part 425 Says Now

The Commission's February 12, 2026 final rule, effective on publication, revised Part 425 "to restore it in the form it existed before the 2024 Rule became effective," citing Eighth Circuit precedent that prior regulations remain valid until validly replaced. It dispensed with notice and comment on the ground that it was "simply undertaking the ministerial task of conforming these Rules to the results ordered by the circuit courts." The same document withdrew the CARS Rule and removed the Non-Compete Rule from the Code of Federal Regulations. The current Part 425 is titled "Use of Prenotification Negative Option Plans" and carries a source note to 91 FR 6509.

The restored rule governs a narrow arrangement. Section 425.1(c)(1) defines a negative option plan as one in which a seller periodically sends subscribers an announcement identifying merchandise, and subscribers receive and are billed for it unless they tell the seller not to send it by a date the seller specifies. Its main requirements are these:

• Promotional material has to disclose seven material terms clearly and conspicuously, including any minimum purchase obligation, a contract-complete subscriber's right to cancel at any time, and whether billing includes postage and handling (§ 425.1(a)(1)).
• The announcement and rejection form have to be mailed at least 20 days before the return date or 15 days before the mailing date, or the mailing date has to fall at least 10 days after receipt, and any system has to leave the subscriber at least ten days to mail the form (§ 425.1(a)(3)).
• The seller has to credit returns and guarantee return postage where the subscriber's form was timely or the announcement arrived too late to allow ten days (§ 425.1(b)(1)).
• Introductory and bonus merchandise has to ship within four weeks of an order, subject to an exception for unanticipated circumstances and a reasonably equivalent alternative offer (§ 425.1(b)(3)).
• A properly identified contract-complete subscriber's membership has to be terminated promptly on written request (§ 425.1(b)(4)).

Nothing in the restored part addresses automatic renewals, continuity plans, free trials or online cancellation. The Commission's own March 2026 notice describes prenotification plans as "the only negative option practice currently covered by the Commission's Negative Option Rule."

What ROSCA Still Requires

The vacatur did not affect the one federal statute written specifically for online negative option sales. Section 4 of the Restore Online Shoppers' Confidence Act, 15 U.S.C. § 8403, enacted December 29, 2010, makes it unlawful to charge or attempt to charge a consumer for goods or services "sold in a transaction effected on the Internet through a negative option feature" unless the seller:

1. "provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer's billing information";
2. "obtains a consumer's express informed consent before charging the consumer's credit card, debit card, bank account, or other financial account"; and
3. "provides simple mechanisms for a consumer to stop recurring charges" from being placed on that account.

The statute takes its definition of negative option feature from the Telemarketing Sales Rule, and the Commission's 2026 notice quotes that definition at 16 CFR 310.2(w). ROSCA does not say how conspicuous a disclosure must be, what form consent takes, or what makes a cancellation mechanism simple; those were among the details the 2024 amendments had supplied.

Its enforcement provisions give it force without a rule. Under section 8404(a), a violation "shall be treated as a violation of a rule under section 18 of the Federal Trade Commission Act," which carries the FTC Act's rule-violation penalties. Under section 8405, a state attorney general may sue in federal court on behalf of residents "to obtain appropriate injunctive relief," must give the Commission prior written notice where feasible, and may not bring a separate suit while the same alleged violation is the subject of a pending federal action.

The largest ROSCA resolution to date came after the vacatur. On September 25, 2025, the FTC announced a stipulated order with Amazon.com, Inc. and two executives resolving allegations that Amazon enrolled consumers in Prime without consent and made cancellation difficult, in violation of the FTC Act and ROSCA. The order required a $1 billion civil penalty, which the FTC called "the largest ever in a case involving an FTC rule violation," and $1.5 billion in redress, and the release describes the matter as "only the third ROSCA case in which the FTC has obtained a civil penalty." Its conduct terms include a clear and conspicuous button to decline Prime and a cancellation route available through "the same method that consumers used to sign up."

The Rulemaking That Followed

On December 3, 2025, the Commission published notice at 90 FR 55701 of a petition from the Consumer Federation of America and the American Economic Liberties Project asking it "to renew the FTC's trade regulation rulemaking concerning the use of negative option plans," with comments due January 2, 2026.

On March 13, 2026, it published an advance notice of proposed rulemaking at 91 FR 12318, RIN 3084-AB54, seeking comment on amendments "to help consumers avoid recurring payments for products and services they did not intend to order and to allow them to cancel such payments without unwarranted obstacles." Comments were due April 13, 2026. An advance notice contains no rule text. This one lists negative option cases brought since 2019 against Vonage, Amazon, Adobe, Uber, LA Fitness and Instacart, and summarizes five section 5 principles from past guidance and cases: disclosure of material terms, clear and conspicuous presentation, disclosure before agreement, consent, and not impeding cancellation. It also cites automatic renewal statutes in California, Colorado, Vermont and Virginia.

The Commission's regulatory agenda, published August 14, 2026 at 91 FR 53156, lists "the removal of the vacated 2024 amendments to the Negative Option Rule, 16 CFR 425" among current rulemakings likely to have some impact on small entities. A Federal Register search of Commission documents mentioning negative option, run for this post, returned no proposed rule or final rule after the March 2026 advance notice. On that record, the only negative option rule in the Code of Federal Regulations on September 14, 2026 is the restored prenotification text, with ROSCA and section 5 governing online subscriptions.

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