[Update as of Jan. 21, 2025] The 8th Circuit Court of Appeals has rejected a request from the Interactive Advertising Bureau and other plaintiffs to block the Federal Trade Commission’s newly implemented click-to-cancel rules, according to Media Post and other reporting. The new rules are designed to make it easier for consumers to end their subscriptions to publications, products and services, but the IAB has argued that organizations will face “irreparable harm” if they’re required to comply. The rules officially went into effect on Jan. 15, 2025, but businesses have until May 15, 2025 to update their subscription protocols.
[Update as of 10/29/24] The Interactive Advertising Bureau (IAB), along with the Electronic Security Association (ESA) and the National Cable Television Association (NCTA) have filed a formal lawsuit against the Federal Trade Commission’s new “click-to-cancel” rule, alleging that the FTC failed to adhere to proper procedures in issuing the rule, including conducting a comprehensive economic analysis.
“In multiple filings, we’ve simply asked the FTC to follow the law and Constitution when issuing major regulations,” said Lartease Tiffith, EVP for Public Policy at the IAB in a statement. “Instead, the FTC has introduced overly broad rules, bypassing public input and congressional mandates. While IAB supports reasonable regulation, these new rules threaten a business model essential to companies of all sizes across various industries — and to consumers.
“The FTC’s rules could eliminate free trials and straightforward renewals, replacing them with cumbersome forms and legal jargon — ultimately costing consumers both time and money,” Tiffith continued. “Furthermore, vague language and excessive penalties will discourage businesses across industries from offering subscription services altogether.”
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Instead the IAB believes that the FTC should focus its resources on punishing bad actors.
Original story from 10/25/24 begins-
A range of business groups — including the Interactive Advertising Bureau (IAB), the Michigan Press Association and the National Federation of Independent Businesses (NFIB) — have filed two apparently coordinated petitions to block the Federal Trade Commission’s new “click-to-cancel” rule.
The final rule, released by the FTC earlier this month, outlines a number of now-prohibited subscription cancellation practices, all aimed at making it as easy for a consumer to cancel a subscription as it is to sign up for one.
However, the business groups challenging the rule claim that it is “arbitrary, capricious and an abuse of discretion within the meaning of the Administrative Procedure Act.” The groups also claim that the FTC went beyond its authority in issuing the rule.
The complaints were filed in two separate petitions: one by the Michigan Press Association and the NFIB in the Sixth Circuit Court of Appeals, and a second filed by multiple trade associations, including the IAB, the Electronic Security Association and cable lobbying group NCTA-The Internet & Television Association in the Fifth Circuit.
“The final rule is an attempt to regulate consumer contracts for all companies in all industries and across all sectors of the economy in which the customer purchases a service or subscription that will continue unless the customer exercises the option to cancel,” reads both petitions. “The Final Rule calls these ‘negative option’ contracts — estimated as covering over 1 billion paid subscriptions in the United States — and deems them all to be deceptive unless they comply with onerous new regulatory obligations regarding disclosures, how those disclosures are communicated, a ‘separate’ consent requirement, regulations of truthful company representative communications with customers, and prescriptive mandates for service cancellation, among others.”
The petitions ask the courts to determine if the FTC complied with the agency’s Magnuson-Moss rulemaking requirements, claiming that the final rule was “unsupported by substantial evidence” and based on determinations that did not allow for consideration of “disputed material facts.” The ultimate goal of both petitions is for either or both courts to vacate the rule and set it aside, thereby making it unenforceable by the FTC.
The FTC faced similar pushback to its Non-Compete Rule, which was issued in April 2024 and blocked by a federal judge in August.
