Appeals Court Blocks FTC 'Click-to-Cancel' Rule

FTC’s “Click-to-Cancel” Rule Blocked by Appeals Court

A federal appeals court has halted the implementation of the Federal Trade Commission’s (FTC) “click-to-cancel” rule. This regulation aimed to simplify subscription cancellations for consumers.

Details of the Court Ruling

The 8th U.S. Circuit Court of Appeals in St. Louis issued the ruling on Wednesday. It determined that the FTC did not adequately assess the potential costs and benefits associated with the rule before its passage.

The FTC, under the leadership of former Chair Lina Khan, had previously approved the rule. Its scheduled effective date was July 14th.

Key Provisions of the Rule

The blocked regulation mandated that businesses offer cancellation methods equivalent in ease to the original subscription signup process. If a subscription was initiated with just a few clicks, the cancellation process should have been similarly straightforward.

Navigating complex websites or interacting with automated chatbots to cancel a subscription would have been prohibited under the rule.

Consent Requirements for Charges

Furthermore, the rule stipulated that businesses must secure explicit customer consent prior to charging for memberships, automatic renewals, or services linked to free trial periods.

This included obtaining affirmative agreement before billing customers for ongoing subscriptions or automatically renewing their access.

Impact of the Ruling

The court’s decision effectively prevents the FTC from enforcing the “click-to-cancel” rule at this time. Businesses are not currently required to comply with its provisions.

The ruling highlights the importance of thorough cost-benefit analysis in the rulemaking process for federal agencies.