8th Circuit Vacates FTC's 'Click-to-Cancel' Rule
The FTC failed to follow procedural requirements of the FTC Act when it adopted its "click-to-cancel" rule, an 8th U.S. Circuit Court of Appeals panel said Tuesday as it vacated the regulation. NCTA, the U.S. Chamber of Commerce and others petitioned the panel about the rule (see 2411220029), which is aimed at making it easier to cancel negative-option contracts, where consumers must actively opt out of monthly subscriptions.
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Excusing the FTC's noncompliance with the act -- such as not conducting a regulatory analysis of the rule when it was supposed to and the petitioners not being able to engage with the FTC's cost-benefit estimates earlier in the rulemaking -- "could open the door to future manipulation of the rulemaking process," the three-judge panel decided Tuesday (docket 24-3137). "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." Judges James Loken, Jonathan Kobes and Ralph Erickson heard oral argument in June (see 2506100021). The rule was adopted last year, and the compliance deadline is July 14 (see 2505120004).