On March 11, 2026, the Federal Trade Commission announced it is seeking public comment on an Advance Notice of Proposed Rulemaking (ANPRM) regarding its Rule Concerning the Use of Prenotification Negative Option Plans, commonly known as the Negative Option Rule. The announcement signals the agency's renewed effort to regulate subscription cancellation practices, automatic renewals, and related negative option marketing programs after the Eighth Circuit vacated the FTC’s "Click-to-Cancel" Rule last year.
Background: From the 1973 Rule to the 2024 Amendments
The FTC originally adopted its Negative Option Rule in 1973, with a narrow focus on prenotification plans for physical goods — the classic "book-of-the-month" or "record club" model in which merchandise is shipped automatically unless the consumer affirmatively declines. For decades, the rule remained limited to that narrow category.
In October 2019, the FTC issued an initial ANPRM seeking comment on whether the Negative Option Rule should be modernized to address the explosion of digital subscriptions and automatic renewal programs. Following an extensive comment period, the FTC published a Notice of Proposed Rulemaking (NPRM) in April 2023, proposing sweeping amendments that would have expanded the rule's scope to cover all negative option programs — including online subscriptions, free-to-paid trial conversions, and automatic renewals across all media.
In October 2024, the Commission adopted the final amended Negative Option Rule — commonly referred to as the "Click-to-Cancel" Rule — by a 3-2 vote, with Republican Commissioners Melissa Holyoak and Andrew Ferguson dissenting. The final rule imposed several key requirements, including:
Express informed consent: Sellers must obtain a consumer's "unambiguously affirmative" consent to the negative option feature, separate from consent to other transaction terms.
- Clear and conspicuous disclosures: Material terms must be prominently disclosed before obtaining the consumer's billing information.
- Simple cancellation mechanisms: Cancellation must be at least as easy as the method used to enroll, available through the same medium, and must immediately halt charges.
- Prohibition on misrepresentations: Sellers are barred from misrepresenting any material fact when marketing goods or services with a negative option feature.
The rule was quickly challenged in court by a coalition of industry groups, and the litigation was consolidated in the Eighth Circuit.
The Eighth Circuit Ruling
On July 8, 2025, the U.S. Court of Appeals for the Eighth Circuit issued a per curiam decision vacating the amended Negative Option Rule in its entirety. Critically, the court's ruling was based on procedural grounds, not on the substance of the rule.
The court held that the FTC failed to conduct a mandatory preliminary regulatory analysis as required by the FTC Act when a proposed rule is expected to have an annual economic impact exceeding $100 million. During the rulemaking process, an Administrative Law Judge had determined that the rule's economic impact would exceed the statutory threshold. Despite this finding, the FTC proceeded to issue only a final regulatory analysis alongside the final rule, rather than going back and conducting the required preliminary analysis.
The Eighth Circuit found that this procedural deficiency was not harmless, reasoning that the FTC's failure deprived interested parties of a meaningful opportunity to engage with the agency's cost-benefit analysis at an earlier point in the rulemaking process. The court warned that treating this error as harmless could "open the door to future manipulation of the rulemaking process" by providing the FTC with a "procedural shortcut" to limit public engagement.
The court expressly declined to address the petitioners' substantive challenges, including whether the rule exceeded the FTC's statutory authority or was arbitrary and capricious. This means the Eighth Circuit's decision left the door open for the FTC to pursue new rulemaking — provided it follows proper procedures.
The FTC's Renewed Rulemaking Effort
Following the ruling, on January 30, 2026, the FTC announced that it had submitted a draft ANPRM concerning the Negative Option Rule to the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget for review. The Commission vote approving the ANPRM submission was 2-0, signaling bipartisan support for restarting the rulemaking process.
This submission to OIRA was itself noteworthy. Under Executive Orders 12866 and 14215, the latter issued by President Trump in 2025, all executive branch departments and agencies — including independent agencies like the FTC — must submit their proposed and final "significant regulatory actions" for OIRA review. OIRA designated the ANPRM as a "significant regulatory action," requiring its approval before the FTC could publish the notice in the Federal Register. This White House review requirement is a new procedural layer for the FTC, which historically was not subject to OIRA preclearance as an independent agency.
After OIRA completed its review and cleared the ANPRM, the FTC published it in the Federal Register and announced the opening of the public comment period on March 11, 2026.
What the ANPRM Covers
Unlike a Notice of Proposed Rulemaking, an ANPRM does not contain proposed rule text. Instead, it solicits broad public input on the regulatory landscape and the agency's potential approaches. As required by the FTC Act, the ANPRM includes a description of the area of inquiry, the objectives the Commission seeks to achieve, and possible regulatory alternatives under consideration.
The ANPRM focuses on four key areas of inquiry:
- Marketplace for Negative Option Programs: The Commission seeks information on the extent to which businesses market products and services using negative options and how these programs currently operate across different industries and media.
- Negative Option Practices: The FTC seeks information on practices that (a) prevent consumers from understanding the terms of a negative option program, (b) result in consumers being enrolled without their express informed consent, or (c) deter consumers from canceling their enrollments — and whether such practices are prevalent in the marketplace.
- Addressing Unlawful Practices: The Commission seeks input on specific ways to address unfair or deceptive negative option practices, including options such as retaining the current (pre-2024) rule, adopting provisions from the vacated 2024 rule or some other provisions, or implementing alternatives to regulation (such as consumer and business education). The FTC is also soliciting comment on the costs and benefits of each of these approaches.
- Additional Topics: The ANPRM also invites commenters to provide suggestions or propose alternative methods by which the FTC may achieve its regulatory objectives.
The FTC is encouraging commenters to submit market studies, economic data, and other empirical evidence to support their positions — a clear response to the Eighth Circuit's criticism that the prior rulemaking lacked adequate economic analysis.
The Rulemaking Road Ahead
The ANPRM is only the first step in what is expected to be a lengthy rulemaking process under the FTC's heightened Magnuson-Moss procedures. The anticipated timeline includes the following stages:
- Stage One (Public Comment Period on the ANPRM): The FTC will accept public comments for 60 to 90 days following publication.
- Stage Two (Review and Congressional Notification): After reviewing comments and notifying certain Congressional committees, the FTC would then develop a proposed rule.
- Stage Three (Notice of Proposed Rulemaking): The FTC would publish an actual proposed rule with specific regulatory text, followed by another public comment period.
- Stage Four (Informal Hearing): Interested parties may request an informal hearing to present testimony on disputed issues of material fact.
- Stage Five (Preliminary Regulatory Analysis): In light of the Eighth Circuit's ruling, the FTC will need to conduct the required preliminary regulatory analysis if the rule's economic impact is expected to exceed $100 million.
- Stage Six (Final Rule): Following all comment periods, hearings, and analysis, the FTC would issue a final rule.
Industry observers expect this process to take years. As one law firm noted, "we are likely years away from a new rule coming into effect."
The Existing Regulatory Framework
In the meantime, federal regulation of negative option practices is governed by a patchwork of existing authorities:
The Original Negative Option Rule: This 1973 rule remains in effect but applies only to prenotification plans for physical goods — a narrow category in today's digital subscription economy.
The Restore Online Shoppers' Confidence Act (ROSCA): This federal statute applies to online negative option features and requires clear disclosure, express informed consent, and a simple mechanism to stop recurring charges. ROSCA remains the FTC's primary enforcement tool for subscription practices.
The Telemarketing Sales Rule (TSR): This rule addresses negative option features in the context of telemarketing transactions.
Section 5 of the FTC Act: The FTC retains its general authority to combat unfair or deceptive acts and practices.
The FTC continues to aggressively enforce these existing authorities. Recent settlements include a $2.5 billion resolution with Amazon over its Prime subscription enrollment and cancellation practices and a $27.6 million judgment against Legion Media LLC involving subscription practices affecting over 1.2 million consumers. The current civil penalty for FTC violations stands at $53,088 per violation, per day.
What Businesses Should Do Now
The FTC's publication of the ANPRM on March 11, 2026, signals a deliberate and methodical restart of the rulemaking process — one designed to avoid the procedural pitfalls that doomed the prior Click-to-Cancel Rule. The Commission is putting economic analysis and public participation front and center, inviting broad input on whether and how to update the Negative Option Rule for the modern marketplace.
While a final rule is likely years away, the direction of travel is clear: the FTC remains committed to strengthening federal regulation of subscription and automatic renewal practices. Businesses should engage with the comment process, maintain rigorous compliance with existing federal and state requirements, and prepare for a regulatory environment in which negative option practices will face continued and intensifying scrutiny.
