The click-to-cancel rule has been cancelled faster than I can cancel a WP Engine subscription!
Last October I reported that the FTC adopted a ‘click-to-cancel' rule that would require businesses to make it just as easy to cancel a subscription as it was to sign up for it, along with other subscription-related consumer protections.
Former FTC Chair Lina Khan said at the time:
“Too often, businesses make people jump through endless hoops just to cancel a subscription. The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
The new rules were set to take effect today on July 14th, but a federal appeals court struck down the rules last week, officially making them dead in the water.
The US Court of Appeals for the 8th Circuit wrote:
“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.”
So what went wrong?
The FTC is required to conduct a preliminary regulatory analysis when a rule has an estimated annual economic impact of $100M or more. The FTC initially claimed it did not surpass that threshold in order to fast track the rule into law, however an administrative law judge later found that compliance costs would in fact exceed $100M, and therefore the FTC didn't go through the right channels to implement the law.
The judges said the lack of a preliminary analysis meant that industry groups and businesses weren't given enough time to contest the FTC's findings, and that the FTC's tactics, if not stopped:
“could open the door to future manipulation of the rulemaking process. Furnishing an initially unrealistically low estimate of the economic impacts of a proposed rule would avail the Commission of a procedural shortcut that limits the need for additional public engagement and more substantive analysis of the potential effects of the rule on the front end.”
So, kind of like issuing too many executive orders?
Now what?
Does this ruling mean that we can expect the FTC to reintroduce the click-to-cancel rule the proper way?
They did not say. However, given that the FTC is now fully Republican run, and they are the ones who initially voted against the rule last year — I highly doubt it. I hope the FTC proves me wrong though!