A recent decision by a federal appeals court has blocked a proposed “click-to-cancel” rule from the Federal Trade Commission (FTC) that aimed to simplify the cancellation process for unwanted subscriptions and memberships. This rule was scheduled to take effect soon when the U.S. Court of Appeals for the Eighth Circuit pointed out that the FTC had made a procedural error by not providing a preliminary analysis of the rule’s impact on the economy, particularly since the anticipated effect was estimated to exceed $100 million.
Initially, the FTC believed that the rule would have a lesser impact on the national economy. However, an administrative law judge later ruled that it would indeed surpass the specified threshold. The appeals court ultimately vacated the rule due to these procedural shortcomings.
The FTC’s proposed changes were part of a broader initiative by the Biden administration known as “Time is Money,” aimed at reducing consumer-related complications. The agency intended for businesses to clearly disclose details about free trials and to ensure that customers could cancel recurring subscriptions with the same ease that they signed up for them.
While the court expressed disapproval of misleading practices in marketing, it emphasized that the procedural issues with the FTC’s rulemaking process were significant enough to warrant its cancellation. The FTC did not provide any comments following the ruling.
In addition, the agency is preparing to move forward with a trial concerning Amazon’s Prime program. This trial stems from a lawsuit alleging that Amazon enrolled consumers in its Prime service without their consent and made it difficult for them to cancel their subscriptions. The trial is set to be held next year.
