A federal appeals court today struck down a "click-to-cancel" rule that would have required companies to make cancelling services as easy as signing up. The Federal Trade Commission rule was scheduled to take effect on July 14 but was vacated by the US Court of Appeals for the 8th Circuit.
A three-judge panel ruled unanimously that the Biden-era FTC, then led by Chair Lina Khan, failed to follow the full rulemaking process required under US law. "While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission's rulemaking process are fatal here," the ruling said.
Indicating their sympathy with the FTC's motivations, judges wrote that many Americans "have found themselves unwittingly enrolled in recurring subscription plans, continuing to pay for unwanted products or services because they neglected to cancel their subscriptions." Last year, the FTC updated its 1973 Negative Option Rule by "adding provisions that bar sellers from misrepresenting material facts and require disclosure of material terms, express consumer consent, and a simple cancellation mechanism," the ruling said.
