A US federal appeals court has overturned the Federal Trade Commission’s “click to cancel” rule. The rule would have made it easier for consumers to cancel subscriptions by requiring companies to provide a straightforward way to cancel subscriptions and recurring charges and would have made it illegal to prevent cancellation through retention offers or long call center wait times. Sellers would have also been required to obtain a consumer’s expressed informed consent to a negative option feature before charging them.
The FTC stated that the rule was the result of receiving thousands of complaints about negative option marketing and recurring subscription practices each year, steadily increasing in recent years, with the goal for the rule to be preventing businesses unfairly siphoning financial gain from consumers without their knowledge or trapping them in a costly membership.
But just days before the rule would take effect, the US court of appeals for the eighth circuit halted the rule, citing that the FTC had not followed the required procedures under the FTC Act during its rule-making process. While the justices stated that they do not endorse unfair and deceptive practices in negative option marketing, they also could not approve of the creation of mandates that could potentially transform operational expectations for businesses without a clear legislative directive.
