Federal Enforcement Remains Strong
Despite the Eighth Circuit’s July 2025 vacation of the FTC’s “click to cancel” rule, the FTC demonstrated yesterday that it remains committed to aggressive enforcement of subscription cancellation practices. In a unanimous 3-0 vote, the FTC filed suit against LA Fitness operators Fitness International, LLC and Fitness & Sports Clubs, LLC, alleging the gym chain made it “exceedingly difficult” for consumers to cancel memberships across more than 600 locations serving 3.7 million members.
The LA Fitness action, filed in the U.S. District Court for the Central District of California, illustrates the FTC’s continued exercise of its authority under existing federal statutes, particularly the Restore Online Shoppers’ Confidence Act (ROSCA) and the FTC Act’s prohibition on unfair and deceptive practices.
LA Fitness Case: A Blueprint for Prohibited Practices
The FTC’s complaint details practices businesses must avoid related to subscriptions or other recurring charges:
Restrictive Cancellation Methods: LA Fitness required consumers to cancel either in-person or by certified mail, despite offering multiple convenient enrollment options, including online signup.
Limited Personnel Access: While multiple employees could enroll members, only one specific employee per location could process cancellations, often restricting cancellation availability to business hours when consumers are typically working.
Complex Administrative Hurdles: The cancellation process required consumers to log into accounts using specific credentials (original email, key tag number, and first five digits of payment information), then print forms from the website.
Inadequate Disclosure: The company failed to inform consumers they could cancel add-on services individually or submit simple written cancellation notices instead of using company forms.
Rejection of Alternative Methods: Staff were trained to reject phone and email cancellation requests and deny escalated complaints, forcing consumers through the restrictive formal process.
State-Level Activity is Also Expanding
While federal rulemaking was turned back by the courts, state legislation and rulemaking in this area continue to advance rapidly. Recent developments include enhanced automatic renewal statutes in California and New York, with over a dozen states strengthening subscription cancellation requirements in the past two years.
Dealer Implications
The LA Fitness action has relevance for dealers because many now sell recurring monthly or annual charges for connected vehicle services (navigation, remote start, Wi-Fi hotspots), vehicle service contracts with monthly payment plans, maintenance packages, roadside assistance, or other premium infotainment features. Some of these arrangements are subscriptions that could fall squarely within the FTC’s definition of “negative option marketing,” where consumer silence is interpreted as acceptance of continuing charges.
Dealers face particular vulnerability because automotive subscription services often involve long-term customer relationships and high-value recurring charges. The FTC’s focus on practices that make cancellation “exceedingly difficult” could easily apply to dealership scenarios where customers must return to the specific selling location, speak only to certain managers, or navigate complex manufacturer/vendor portal systems to cancel connected services or other products. Given that vehicle purchases already involve extensive paperwork and multiple add-on options, clear disclosure and accessible cancellation procedures become especially critical to avoid the types of consumer frustration that trigger regulatory scrutiny, similar to some concerns raised regarding the cancellation/refund of F&I products.
Recommended Action Items for Dealers:
- Determine Whether You Offer any Applicable Products: Review your products and practices in F&I and elsewhere, and determine whether your staff is offering subscription or recurring charge products or services to consumers. Satellite radio, On Star-type services, software or connectivity subscriptions, or even certain F&I products. If consumers pay a monthly subscription fee, it should be considered.
- Review Cancellable Products and Current Practices: Review cancellation procedures for these products that are cancellable (including products provided by the manufacturer and other third parties) to confirm they provide sufficient disclosure of cancellation processes and to ensure they match enrollment accessibility and convenience. In other words, it should be as easy to decline or cancel as it was to sign up.
- Ensure Proper Disclosures: Work with vendors or OEMs to ensure that you have the proper information to disclose to consumers and that you record the fact that you made this disclosure. Provide transparent information about cancellation methods, timing, and any associated fees upfront and throughout the customer relationship.
- Documentation: Maintain clear records of all cancellation requests and processing
Outlook
The LA Fitness enforcement action confirms that, despite the Court’s vacation of the FTC’s Click to Cancel rule, the FTC is still interested and empowered to review and challenge subscription practices. Even without a specific rule, the FTC is pursuing case-by-case enforcement under existing authorities. This, combined with a tremendous increase in state laws and regulations in the area, means that dealers must be aware of the obligations in connection with subscription, negative option plans, and other recurring charges.
Key Message for Dealers: Proactive compliance with consumer-friendly cancellation practices is essential. Work with your vendors and OEM partners for whom you may offer subscriptions to ensure compliance.