Industrial groups sue the FTC to halt one-click cancellation rule.
"Who would have imagined it?"
Three industry groups have filed a lawsuit to prevent the Federal Trade Commission (FTC) from implementing its new rule known as "Click to Cancel," which requires companies to make it easier for consumers to cancel subscriptions. This new regulation expands the Negative Option Rule, prohibiting companies from imposing cancellation methods that are different from those used for enrollment. Therefore, if a customer signs up online, they must also have the option to cancel their subscription in the same way, without having to resort to a support line, send a letter, or appear in person.
Most of this rule, unless halted by the court, would take effect 180 days after its publication in the Federal Register. In their lawsuit filed today in the U.S. Court of Appeals for the Fifth Circuit, the Internet and Television Association, the Electronic Security Association, and the Interactive Advertising Bureau have argued that the rule is "arbitrary, capricious, and an abuse of discretion." These groups, whose members typically benefit from subscriptions that are easy to start but difficult to cancel, believe that the FTC is attempting to "regulate consumer contracts for all businesses across all sectors of the economy." The rule applies to any subscription that automatically renews, covering everything from gym memberships to services like Amazon Prime, including free trials and meal kit delivery plans.