Trade Associations Sue to Block FTC ‘Click-to-Cancel’ Rule

Three trade associations filed a lawsuit Wednesday (Oct. 23), aiming to block the Federal Trade Commission’s (FTC) “click-to-cancel” rule.

The suit claims that the rule exceeds the FTC’s authority and is not supported by evidence, Reuters reported Wednesday.

The three plaintiffs are the NCTA — The Internet & Television Association, which represents cable and internet providers; the Electronic Security Association (ESA), which represents the home security industry; and the Interactive Advertising Bureau (IAB), which represents the online advertising industry, according to the report.

The suit was filed with the 5th U.S. Circuit Court of Appeals in New Orleans, per the report.

The ESA and the IAB did not immediately reply to PYMNTS’ request for comment.

The NCTA provided PYMNTS with a copy of the filing.

In the petition for review, the plaintiffs asked the court to review the FTC’s final rule on the grounds that it is “arbitrary, capricious and an abuse of discretion within the meaning of the Administrative Procedure Act,” based on determinations that “precluded disclosure of disputed material facts which w[ere] necessary for fair determination … of the rulemaking proceeding taken as a whole … and in excess of the commission’s statutory authority.”

“Petitioners respectfully request that this court hold unlawful, vacate, enjoin and set aside the final rule and provide such additional relief as may be appropriate,” the suit said.

The FTC announced its final rule Oct. 16, saying it will require sellers to make it as easy for consumers to cancel their subscriptions, memberships and other recurring payment programs as it was to sign up.

The rule will apply to almost all negative option programs — those that renew automatically unless the consumer cancels — in any media, the regulator said at the time in a press release.

It will go into effect 180 days after it is published in the Federal Register, according to the release.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Commission Chair Lina M. Khan said in the release. “The FTC’s rule will end these tricks and traps, saving Americans time and money.”

The FTC’s ruling responds to widespread frustration with complicated processes around subscription cancellations, PYMNTS reported Friday (Oct. 18).