The rule, which would force companies to make it clear and simple for users to cancel subscriptions and services, would've made lives easier for consumers across the United States. However, the ruling by the Eighth Circuit Court of Appeals effectively leaves the rule ineffectual.
While the rule was finalized in October 2024, the implementation of the rule was delayed until July 14. However, that is no longer a possibility following the ruling.
The court was petitioned by companies and industry associations, insisting that the FTC had not followed the correct procedures to introduce the rule. This includes conducting analysis on the issue before actually ratifying the rule.
The ruling squarely sides with the companies. Though the court states it does not endorse unfair and deceptive practices in "negative option marketing," it describes the procedural deficiencies of the rule-making process as "fatal."
Vacation of the entire rule is the correct move, the court says, because of the prejudice suffered by Petitioners as a result of the Commission's procedural error. It's not clear in the ruling what that "prejudice" is, though.
The decision means that the rule will not be applicable in its current state, and companies can continue to handle cancellation attempts as well or as difficult for the consumer as they do now. However, it doesn't stop the FTC from going through the correct motions to bring it back again in the future.
That may take a while to occur, as the current political leaning of the FTC and the U.S. government in general won't make it a priority.
A big pro-consumer chance, missed
The rule change would've made a big impact for consumers frustrated by the cancellation policies of subscriptions and services. The rule was made in response to businesses making it very hard for consumers to actually perform a cancellation, often by introducing multiple barriers and extensive cancellation fees to impede progress.
As of the October implementation, the rules would have prevented sellers from misrepresenting material facts while marketing goods or services with a "negative option feature," meaning tougher cancellation procedures.
It would have also punished firms failing to disclose terms about cancellations, and failing to get a consumer's express consent over the procedures. Companies would also have had to provide a simple mechanism for cancellations, and to immediately halt charges.
The full ruling follows:
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