On July 14, the Federal Trade Commission (FTC) planned to introduce a rule aimed at simplifying the process for consumers to cancel subscriptions. However, the U.S. Court of Appeals for the 8th Circuit struck down the rule altogether, leaving consumers entangled in the complicated web of subscription services.
The unanimous decision from the three-judge panel, which included two appointees from Donald Trump’s first presidential term, rejected the click-to-cancel rules that had been established and approved during Lina Khan’s leadership at the FTC. Interestingly, the court’s reasoning wasn’t that the proposed rule was flawed—rather, they found fault with the process by which it was created.
In their ruling, the judges stated, “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.”
A key issue was the FTC’s failure to conduct a preliminary regulatory analysis for the proposal, as required for any rule that could impact the economy by an estimated $100 million (€93 million) or more annually. Surprisingly, the FTC concluded during the Notice of Proposed Rulemaking period that the rule would not exceed that threshold—an opinion that an administrative law judge contested. This oversight ultimately led to the rule’s demise, as it indicated that the FTC didn’t fulfill its regulatory obligations or allow adequate time for businesses to respond.
If you think this is just an isolated incident, think again. The rule faced opposition from several lobbying groups representing cable and internet service providers, insurance companies, gyms, and other businesses reliant on creating obstacles for customers trying to cancel services. Some of these groups previously argued that making subscription cancellations easier would lead to a wave of “accidental cancellations,” showcasing their lack of concern for consumer welfare.
Even though the court expressed some sympathy towards the rule, its revival under the current administration seems unlikely. Initially proposed during the Biden administration, the two Republican members of the FTC opposed the rule, including Andrew Ferguson, who now leads the agency. Currently, there are no Democratic commissioners on the commission, as Trump previously dismissed the Biden-era appointees.
As it stands, you can expect to encounter the same frustrating customer support phone trees and absurd requirements like sending a physical letter to cancel a subscription.
Are subscription cancellation rules being ignored by companies?
Yes, many companies are taking advantage of complicated cancellation processes, often making it difficult for consumers to exit their subscriptions.
How can consumers protect themselves against difficult cancellation practices?
Consumers should carefully read the terms and conditions of subscriptions before signing up, and keep notes of cancellation policies to avoid frustration later.
What steps can I take to make subscription cancellations easier for myself?
Consider using digital tools or apps that help manage subscriptions and simplify cancellation processes, alongside knowing your rights as a consumer.
Should the FTC be held accountable for the repeal of such consumer-friendly rules?
Yes, there is a growing call for accountability in the regulatory processes that impact consumer rights, particularly in subscription-based services.
In conclusion, the recent ruling has left many consumers feeling trapped in subscription services that are designed to be difficult to cancel. As these issues continue to unfold, it’s important to stay informed and advocate for fair consumer practices. For more insights, explore related topics at Moyens I/O.