Days before it was scheduled to take effect, a federal appeals court blocked a click-to-cancel rule that would have compelled companies to make it simple for customers to cancel unwanted subscriptions and memberships.
Adopted in October, the Federal Trade Commission’s proposed reforms mandated that companies get a customer’s permission before charging for memberships, auto-renewals, and programs associated with free trial offerings.
With NBC 7, you can watch San Diego News for free, anywhere, at any time.
At the time, the FTC stated that companies must also let customers cancel recurring subscriptions as simply as they initiated them and disclose when free trials or other promotional offers will expire.
The FTC’s plan was incorporated by the Biden administration as part of its Time is Money campaign, a nationwide effort to combat consumer-related annoyances that was unveiled last year.
With our News Headlines email, you can receive the best local San Diego stories every morning.
Unpaid toll texts are likely a scam
FTC moves to take the frustration’ out of canceling subscriptions for consumers
The U.S. Court of Appeals for the Eighth Circuit ruled this week that the FTC erred in procedure by neglecting to develop a preliminary regulatory analysis, which is necessary for rules that have an annual impact on the U.S. economy of more than $100 million. The FTC rule was scheduled to take effect on Monday.
Since the FTC first estimated that the rule’s impact on the national economy would be less than $100 million, it claimed it was exempt from developing a preliminary regulatory review. The economic impact would exceed the $100 million threshold, according to a court in administrative law.
The rule was declared void by the court.
The court stated that although we do not support the employment of unfair and misleading tactics in negative option marketing, the Commission’s rulemaking process’s procedural flaws are fatal in this case.
On Wednesday, the FTC declined to comment.
As of for now, the agency is proceeding with its atrial preparations including Amazon Prime. The trial is based on a case filed by the Federal Trade Commission, which claimed that Amazon had enrolled customers in its Prime program against their will and made it difficult for them to quit their memberships.
It is anticipated that the trial will occur the following year.
