Click-to-Cancel Rule Blocked: Impact on Subscription Cancellations

A new rule that would have made canceling subscriptions a breeze for consumers has been put on hold by a federal appeals court right before it was supposed to take effect. The rule, proposed by the Federal Trade Commission, aimed to make it easier for people to cancel memberships and subscriptions they no longer wanted.

The FTC’s changes required businesses to get permission from customers before charging them for memberships, renewals, or programs connected to free trials. They also had to make it clear when free trials or promotions would end and allow customers to cancel recurring subscriptions as easily as they signed up for them.

Scheduled to kick in on Monday, the rule hit a roadblock when the U.S. Court of Appeals for the 8th Circuit ruled that the FTC had skipped a step by not conducting an initial economic analysis. This analysis is needed for rules that could impact the U.S. economy by more than $100 million annually.

The FTC had estimated the rule’s impact to be under the $100 million mark, but an administrative law judge disagreed. As a result, the court decided to nix the rule altogether. While the court emphasized the importance of fair practices in marketing, they found the FTC’s misstep in the rulemaking process to be too critical to overlook.

The FTC has not provided any comments following the court’s decision. Remember, it’s always important to stay informed about changes in consumer protection laws to ensure you’re fully aware of your rights as a consumer.