On July 14, the Federal Trade Commission’s long-awaited rule would have required businesses to make it easy for consumers to cancel subscriptions. Instead, the U.S. Court of Appeals for the 8th Circuit has clicked to cancel the rule entirely, leaving us all stuck suspended in the elaborate web of subscription services.
The three-judge panel, which included two who were appointed to the court during Donald Trump’s first term, voted unanimously to turn back the click-to-cancel rules that were drawn up and approved during Lina Khan’s time as the head of the FTC. The reason for upending the consumer-friendly policy, according to the court, was not because it’s bad law. Rather, it was a bad process.
“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 judges wrote in their ruling.
At issue is the fact that the FTC did not conduct a preliminary regulatory analysis for the proposal, which is required for any rule that has an estimated annual economic impact of $100 million or more. The FTC did, in fact, conclude during the Notice of Proposed Rulemaking period that it didn’t expect the rule to have an economic impact that would exceed that threshold—a finding that an administrative law judge disagreed with. That ultimately doomed the rule, because it meant the FTC did not meet its regulatory obligations, and ultimately didn’t give businesses enough time to provide feedback on the proposal.
You won’t be shocked to learn that the rule was challenged by several lobbying groups representing cable and internet service providers, insurance companies, gyms, and other businesses that have built their model on making people’s lives hell if they try to cancel their service. Some of the same groups previously argued that making canceling subs easy would result in a tidal wave of “accidental cancellations” that would hurt their bottom line, which tells you just how much they think of consumers.
While the court signaled sympathy for the rule itself, it seems unlikely that it’ll get revived under the Trump administration. When first proposed during the Biden era, the two Republican members of the FTC voted against the rule. One of those two “no” votes, Andrew Ferguson, now heads the whole agency, and there are zero Democratic commissioners currently serving on the commission since Trump fired the two holdovers from the Biden administration.
For now, those endless customer support phone trees and absurd requirements like sending in a physical letter to cancel a subscription aren’t going anywhere.
Read the full article here
