Thanks for your interest in Railroadware. Yes it is connected with a concealed slot in the ring (inside) and an E-Clip attached to the spike.

Tim, Railroadware

If your hand towel is fairly large, the ring can pop off the spike...it did that to me. The ring has a groove so it sets on the clip...not really retained per se.

What do you want to do? I am not sure why a towel would raise it up. The towel may be too large for hand towel hardware use.

Try pulling a towel out yourself...it will pop off the retaining ring because it it just sets on it. The bigger issue is the rust that comes off the ring onto the towel, sealing finish isn't adequate or it already wore off.

Bruce, I am not aware of any rust issues with the ring however that particular piece may have an issue as the tube is hollow. I would be glad to replace it or you can return it for a full credit.