Advertising Law Blog

Compliance with complex and sometimes inconsistent federal and state legal requirements for automatic renewal/continuity programs continues to present challenges to marketers. On the federal side, the applicable legal standards continue to whipsaw.

As we have reported previously, at the end of 2024, the then Democrat-led FTC finalized its Rule Concerning Subscriptions and Other Negative Option Plans, commonly referred to as the "Click-to-Cancel" rule. The majority of the substantive provisions of that law were scheduled to go into effect in May 2025. Ultimately, however, the Eighth Circuit vacated the rule, finding that the FTC failed to comply with its procedural obligations during the rulemaking process and that such deficiencies were "fatal" to the rule's validity.

Since the Eighth Circuit decision, it has been questioned what steps, if any, the FTC would take to potentially correct such deficiencies, The FTC has now issued an Advance Notice of Proposed Rulemaking (“ANPRM”) seeking public comment on the Negative Option Rule. The agency is asking the public to opine on the current Negative Option Rule, whether proposed amendments are needed, and about potential regulatory alternatives to address deceptive or unfair negative option practices.

Specifically, the FTC is seeking information on several key topics. The FTC is requesting input on the extent to which businesses use negative options, the practices that result in consumers being enrolled without their express consent, and whether such practices are prevalent in the marketplace. Further, the FTC is requesting information on specific ways to address unfair or deceptive negative option practices, including retaining the current Negative Option Rule in its original form, adopting provisions from the now-vacated 2024 rule, and the costs and benefits of such measures. Comments must be received on or before April 13, 2026.

Relatedly, the DOJ recently announced a settlement with Adobe Inc. regarding the company’s subscription practices. The company has agreed to pay a total of $150 million to settle charges related to its automatic renewal practices, including allegations that Adobe violated the Restore Online Shoppers’ Confidence Act (“ROSCA”) by using fine print and inconspicuous hyperlinks to conceal important subscription details, including an early termination fee, and that the cancellation process involved unnecessary steps and delays. The action, like the landmark $2.5 billion Amazon settlement with the FTC, shows that existing federal law provides regulators with the legal tools to challenge what the government contends are unfair or deceptive continuity programs and the ability to cancel such subscriptions.

TAKEAWAY: Businesses that utilize subscriptions and automatic renewals should continue to monitor the FTC’s rulemaking process. However, it is also important to note that regardless of the FTC’s ultimate actions in this regard, both federal and state agencies continue to regulate automatic renewals, as evidenced by the growing number of state laws and the DOJ’s recent settlement with Adobe. As such, businesses must not focus solely on the FTC’s rulemaking process, and should keep up to date with legislation and enforcement at all levels and across all regulatory agencies.