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The Star
2 days ago
- Business
- The Star
A 'click-to-cancel' rule, intended to make canceling subscriptions easier, is blocked
The FTC's proposed changes, adopted in October, required businesses to obtain a customer's consent before charging for memberships, auto-renewals and programmes linked to free trial offers. — AP A "click-to-cancel' rule, which would have required businesses to make it easy for consumers to cancel unwanted subscriptions and memberships, has been blocked by a US federal appeals court just days before it was set to go into effect. The Federal Trade Commission's proposed changes, adopted in October, required businesses to obtain a customer's consent before charging for memberships, auto-renewals and programmes linked to free trial offers. The FTC said at the time that businesses must also disclose when free trials or other promotional offers will end and let customers cancel recurring subscriptions as easily as they started them. The administration of President Joe Biden included the FTC's proposal as part of its "Time is Money' initiative, a governmentwide initiative that was announced last year with the aim of cracking down on consumer-related hassles. The FTC rule was set to go into effect on July 14, but the US Court of Appeals for the Eighth Circuit said this week that the FTC made a procedural error by failing to come up with a preliminary regulatory analysis, which is required for rules whose annual impact on the US economy is more than US$100mil (RM4.25mil). The FTC claimed that it did not have to come up with a preliminary regulatory analysis because it initially determined that the rule's impact on the national economy would be less than US$100mil (RM4.25mil). An administrative law judge decided that the economic impact would be more than the US$100mil (RM4.25mil) threshold. The court decided to vacate the rule. "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 court wrote. The FTC declined to comment on Wednesday. The agency is currently moving forward with its preparations for a trial involving Amazon's Prime programme. The trial stems from a Federal Trade Commission lawsuit that accused Amazon of enrolling consumers in its Prime programme without their consent and making it difficult for them to cancel their subscriptions. The trial is expected to take place next year. – AP
NBC News
4 days ago
- Business
- NBC News
A ‘click-to-cancel' rule, intended to make canceling subscriptions easier, is blocked
A 'click-to-cancel' rule, which would have required businesses to make it easy for consumers to cancel unwanted subscriptions and memberships, has been blocked by a federal appeals court just days before it was set to go into effect. The Federal Trade Commission's proposed changes, adopted in October, required businesses to obtain a customer's consent before charging for memberships, auto-renewals and programs linked to free trial offers. The FTC said at the time that businesses must also disclose when free trials or other promotional offers will end and let customers cancel recurring subscriptions as easily as they started them. The administration of President Joe Biden included the FTC's proposal as part of its 'Time is Money' initiative, a governmentwide effort that was announced last year with the aim of cracking down on consumer-related hassles. The FTC rule was set to go into effect on Monday, but the U.S. Court of Appeals for the Eighth Circuit said this week that the FTC made a procedural error by failing to come up with a preliminary regulatory analysis, which is required for rules whose annual impact on the U.S. economy is more than $100 million. The FTC argued that it did not have to come up with a preliminary regulatory analysis because it initially determined that the rule's impact on the national economy would be less than $100 million. An administrative law judge decided that the economic impact would be more than the $100 million threshold. The court decided to vacate, or set aside, the rule. '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 court wrote. The FTC declined to comment on Wednesday. trial involving Amazon's Prime program. The trial stems from a Federal Trade Commission lawsuit that accused Amazon of enrolling consumers in its Prime program without their consent and making it difficult for them to cancel their subscriptions. The trial is expected to take place next year.
USA Today
4 days ago
- Business
- USA Today
A court just canceled 'click to cancel.' How the ruling affects you.
A federal appeals court blocked a new rule that would have forced businesses to make it easier to cancel unwanted subscriptions and memberships. The U.S. Court of Appeals for the 8th Circuit struck down the Federal Trade Commission rule just days before it was set to take effect, saying 'fatal' procedural errors were made in the rulemaking process. The FTC could not be reached for comment. Announced in October, the 'click to cancel' rule would have required businesses to make it as 'at least as easy' to cancel a service as it was to sign up. Also, businesses would have had to get consent for subscriptions, auto-renewals and free trials that convert to paid memberships. The rule, which was part of a Biden administration 'Time is Money' initiative to crack down on 'junk fees' and other consumer headaches, passed 3-2, with the FTC's two Republican commissioners voting against it. Don't forget to cancel that subscription How businesses get rich off you forgetting to cancel 'We know signing up for subscriptions is so easy, it is miraculous. That is why we know that the difficulty of cancellation is not an accident. It is a choice. And it's a choice that's causing real harm to consumers,' Samuel Levine, former director of the FTC's Bureau of Consumer Protection, told USA TODAY last year. Consumer groups applauded the new rule as a much needed protection for consumers who get stuck paying for services they no longer want. In 2024, the FTC said it received an average of 70 complaints a day. But click to cancel' soon faced mounting political and legal challenges. Andrew Ferguson, a Republican and the new FCC chairman, voted against 'click to cancel' as an FTC commissioner. The rule was also opposed by business groups like the U.S. Chamber of Commerce, which sued, arguing the FTC had exceeded its statutory authority and that the rule would unfairly saddle businesses with high costs and unnecessary regulatory hurdles. "The court ruled that federal agencies must follow the rulemaking process, including conducting a thorough analysis of how much proposed regulations will cost consumers and businesses," the Chamber of Commerce said in a statement. "The decision provides a safeguard against rushed rulemaking and reinforces the importance of agencies addressing public concerns.' (This story was updated to add new information.)
