FTC and State AGs Continue To Scrutinize Subscription Practices Amidst a Possible Click-To-Cancel Rule Revival

The U.S. Federal Trade Commission (FTC or Commission) has made clear it is prioritizing enforcement regarding deceptive billing and cancellation practices involving recurring subscriptions. On January 13, 2026, the FTC announced yet another lawsuit (this time against JustAnswer and its CEO) alleging violations of the Restore Online Shopper’s Confidence Act (ROSCA). Then, on January 30, 2026, the FTC announced it had taken a preliminary step towards commencing a new rulemaking regarding subscriptions. This development follows a July 2025 decision by the Eighth Circuit Court of Appeals invalidating the agency’s amended Negative Option Rule (also known as Click-to-Cancel). While certainly a headliner, the rulemaking comes at a time when companies must already be mindful of numerous new or enhanced state auto-renewal laws and the prospect of state enforcement.

This Advisory summarizes notable federal and state activity related to auto-renewal laws and closes with key takeaways for companies that use (or are considering using) recurring subscriptions to sell products or services.

Recent FTC ROSCA Actions

ROSCA is the most important enforcement tool that the FTC uses in connection with negative option marketing.¹ Enacted by Congress in 2010, ROSCA requires online sellers using a negative option feature to (1) clearly and conspicuously disclose all material terms of the transaction before obtaining consumers’ billing information; (2) obtain consumers’ express informed consent before charging them; and (3) provide simple mechanisms for consumers to stop recurring charges.² The FTC can seek civil penalties (of up to $53,088 per violation) and consumer redress for ROSCA violations.

Under Chair Andrew Ferguson, the FTC has continued to prioritize ROSCA enforcement, including through the following actions:

• JustAnswer: The FTC alleges that defendants claim consumers can join the online question-and-answer service and get access to expert advice for a small fee. However, when consumers sign up to use the service, the FTC asserts that JustAnswer enrolls them in a recurring monthly subscription without consent and immediately charges them a higher monthly fee, in addition to the fee for joining.³
• Instacart: In December 2025, the company agreed to pay $60 million in consumer refunds to settle allegations it engaged in false advertising and violated ROSCA by failing to adequately disclose that (1) consumers signing up for a free trial membership in Instacart+ would be automatically enrolled into a paid annual subscription program; and (2) membership fees would only be refunded under limited circumstances.⁴
• Uber: Also in December 2025, the FTC, joined by 21 states and the District of Columbia, filed an amended complaint against Uber alleging it charged consumers for its Uber One subscription service without consent and made it difficult to cancel. The complaint alleges that consumers must take at least 12 different actions and navigate at least seven screens to cancel, and if they are within 48 hours of their billing date, consumers must take up to 32 actions and navigate as many as 23 screens to do so.⁵
• Amazon: In September 2025, just days after the trial began, Amazon agreed to resolve the FTC’s case in a historic settlement requiring it to pay a $1 billion civil penalty and $1.5 billion in consumer refunds. The FTC alleged that Amazon and several executives (1) used manipulative or deceptive interface designs to trick consumers into enrolling in auto-renewing Prime subscriptions; and (2) created a complex and difficult process for consumers seeking to cancel, with the goal of preventing them from doing so.⁶
• Chegg: In September 2025, Chegg Inc., an educational technology company, agreed to pay $7.5 million to settle allegations that it failed to provide subscribers with a simple mechanism to cancel recurring charges and continued to charge consumers after they thought they had canceled their memberships.⁷
• LA Fitness: In August 2025, the FTC sued the operators of LA Fitness and other gyms, alleging they made it exceedingly difficult for consumers to cancel their gym memberships. The FTC alleges LA Fitness has required consumers wishing to cancel to either go to the gym or send a cancellation notice by mail, and that both methods are opaque and complicated. The FTC also alleges LA Fitness did not clearly inform consumers that they could cancel add-on services without affecting their gym membership.⁸

Update Regarding the Click-To-Cancel Rule

On January 30, 2026, the FTC announced that it had taken a preliminary step towards a new rulemaking regarding recurring subscriptions. Specifically, it submitted a draft Advance Notice of Proposed Rulemaking (ANPRM) concerning the agency’s Negative Option Rule to the Office of Information and Regulatory Affairs (OIRA).⁹ Once such review is completed, the FTC will publish the ANPRM in the Federal Register for public comment.¹⁰

This follows the Eighth Circuit’s decision to vacate the FTC’s Click-to-Cancel Rule. By way of background, the FTC has an existing Negative Option Rule that is narrow and applies only to one type of negative option marketing (prenotification plans). In October 2024, under former Chair Lina Khan, the FTC amended the rule to apply to nearly all negative option programs in any media (e.g., online, phone, print). While similar to ROSCA in many respects, the amended rule would have imposed some additional and specific requirements regarding disclosures of material terms, obtaining consent, and cancellation.¹¹ For example, the rule required clear and conspicuous disclosure of certain material terms immediately adjacent to where the consumer consents to the negative option feature, and that cancellation be as easy as signing up. It also prohibited misrepresenting any material facts made while marketing goods or services with a negative option feature.

Then-Commissioner Ferguson dissented from the rule (and a number of other consumer protection rulemaking activities during the Biden administration).¹² Shortly after the rule was announced, multiple petitions for review were filed in appellate courts seeking to invalidate it.¹³ As the challenge was pending, Commissioner Ferguson was selected as Chair and made clear that the FTC under President Trump would primarily be a “cop on the beat,” enforcing the laws Congress has passed rather than writing them.¹⁴ Nevertheless, the FTC defended the rule in the agency’s appellate brief filed in March 2025.¹⁵ However, the Eighth Circuit vacated the rule in July 2025 based on procedural deficiencies with the rulemaking process.¹⁶ The FTC did not seek rehearing or Supreme Court review of the Eighth Circuit’s decision.

On December 3, 2025, the FTC published a petition from two non-profit organizations requesting that the agency renew its rulemaking concerning the use of negative option plans. The FTC invited written comments on the petition through January 2, 2026 and explained that after receiving them, it would determine what action to take, if any, regarding the request.¹⁷

While the Commission’s announcement of an ANPRM is a significant development, there are still many required steps under the FTC’s rulemaking procedures before any new rule concerning subscriptions can be issued. Among other things, after receiving comments on the ANPRM and notifying certain Congressional committees, the FTC would then issue a Notice of Proposed Rulemaking (NPRM) setting forth the text of the proposed rule, including any alternatives. In connection with an NPRM, the FTC must allow interested persons to make written submissions and provide an opportunity for an informal hearing. Based on the rulemaking record, if appropriate, the Commission would then issue a final rule with a statement of basis and purpose, with statements regarding the prevalence of the acts or practices addressed by the rule, the manner and context in which they are unfair or deceptive, and the economic effect of the rule.¹⁸

Accordingly, there will be much to follow as the rulemaking process moves forward and the Commission considers the contours of any new rule based on the record that is developed. What has become clear, however, is that the FTC under Chair Ferguson will, in fact, consider consumer protection rulemaking when it advances core agency enforcement priorities. Indeed, on the same day the FTC announced this ANPRM, it announced another ANPRM related to rental housing fees.¹⁹

Recent State Regulation/Enforcement of Subscription Practices

Importantly, though the Eighth Circuit vacated the Click-to-Cancel Rule, many of its requirements live on in a number of new or recently enhanced state auto-renewal laws. Some such laws impose requirements on sellers even beyond what was set forth in the FTC’s rule.

For example, California’s auto-renewal law (CARL) is one of the strictest in the country, and includes new, strengthened requirements that went into effect in July of 2025.²⁰ Under the law, businesses that make auto-renewal offers to consumers in California must, among other things, obtain their “express affirmative consent” to the auto-renewal terms. In addition, those terms and information on how to cancel must be provided to the consumer in a retainable acknowledgment. For consumers who signed up online, sellers must allow them to cancel exclusively online “without engaging in any further steps that obstruct or delay the consumer’s ability to terminate.” When customers request to cancel online, businesses may offer discounts or other promotions to retain them (known as “save” attempts) if a “cancel” button is simultaneously displayed in a prominent and proximate location. Sellers must also provide between seven and 30 days’ notice of a price change to an existing subscription, along with information on how to cancel. For free or discounted trials lasting more than 31 days, businesses must notify customers three to 21 days before the trial expires. And for subscriptions that renew annually, sellers must send consumers an annual reminder prior to renewal that discloses certain key terms and how to cancel.

Notably, California not only recently amended its auto-renewal law, but also actively enforces it. In August 2025, meal kit delivery company HelloFresh paid $7.5 million to settle a lawsuit brought by two California district attorney’s offices alleging that it enrolled consumers into auto-renewing subscription plans without proper disclosure or consent; failed to provide a post-transaction acknowledgment with the subscription’s material terms; and did not offer an easy-to-use mechanism to cancel.²¹ The case was investigated by the California Automatic Renewal Task Force (CART), a coalition of county and city enforcers that addresses complaints regarding subscriptions.

Other states with new or recently updated auto-renewal laws and regulations include Colorado, Connecticut, Massachusetts, Minnesota, New York, and Utah. While there are many similarities between new subscription laws, there are certain noteworthy differences. For example, New York’s law, which became effective in November 2025, requires that businesses either (1) obtain consumers’ advance affirmative consent to increased subscription prices; or (2) allow the consumer to cancel within 14 days after such charge and provide a pro-rata refund for the remaining term of service.²² And Massachusetts’ regulation, which took effect in September 2025, requires that for any subscription term exceeding just 31 days, sellers must provide a pre-renewal notice five to 30 days in advance of when the consumer must cancel to avoid incurring a subsequent charge.²³ Finally, Minnesota’s law, unlike California, does not permit save offers unless the customer affirmatively consents to receive them.²⁴

Just as California is not the only state legislating in this space, it is likewise not alone in bringing actions related to subscriptions. In October 2025, a group of 33 states announced a $4.8 million settlement with TFG Holding, Inc., an online clothing retailer, resolving allegations of deceptive advertising and billing practices, including that TFG automatically enrolled consumers into a membership program with recurring charges without consent, and then made it difficult to cancel.²⁵

New York City Also Prioritizes Subscription “Tricks and Traps”

In early January 2026, New York City’s new mayor, Zohran Mamdani, signed an executive order signaling the city’s intent to use its full authorities to crack down on illegal subscription practices.²⁶ The order provides that the Department of Consumer and Worker Protection (DCWP) will prioritize investigating and taking enforcement action against subscription-related practices that deceive consumers and consider rulemaking to combat such practices.

Takeaways

• The FTC and consumer protection enforcers at the state (and now city) level are closely scrutinizing subscription practices and will not hesitate to bring cases in this area. In addition, plaintiffs’ attorneys are active in the space. Accordingly, when companies that use subscription models that are not in compliance with applicable law, they may be at risk of both government enforcement actions and class action lawsuits.
• Companies should monitor any developments with respect to the FTC’s rulemaking process concerning the Negative Option Rule, including the publication of the ANPRM. This event (and the issuance of an NPRM) provide opportunities for comment from interested parties as the Commission considers the contours of any eventual rule that is promulgated.
• States are continuing to enact new or enhanced auto-renewal laws. While many of these laws contain similar core requirements, some differ in at least certain respects. Thus, companies must stay abreast of regulatory developments at the state level and carefully review new laws as they evaluate and update their auto-renewal compliance policies.

Arnold & Porter regularly advises companies regarding their subscription practices and disputes relating to them. We also help companies participate in rulemaking proceedings. Our Consumer Protection & Advertising practice would be happy to assist with any questions you have regarding recurring subscriptions.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.