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Court Strikes Down FTC’s ‘Click-to-Cancel’ Rule, Which Was Aimed at Letting Consumers Drop Services Easily
A federal appeals court vacated the Federal Trade Commission's Click to Cancel rule -- which was to go into effect next week -- on procedural grounds.
The term “negative option marketing” refers to a sales tactic in which a consumer’s failure to actively turn down an offer is interpreted as acceptance of a recurring subscription charge. Multiple industry associations and individual businesses — including NCTA – The Internet & Television Association, representing large cable operators and programmers — challenged the FTC Click-to-Cancel rule in four federal circuit courts on the grounds that the FTC exceeded the scope of its statutory authority, had failed to satisfy a procedural requirement by declining to conduct a preliminary regulatory analysis during the rulemaking process, and acted arbitrarily and capriciously under the Administrative Procedure Act in issuing a rule of this scope. “The FTC overstepped its authority in adopting these rules, which would have reshaped how businesses handle nearly all aspects of a transaction from enrollment to cancellation,” said ACA Connects president and CEO Grant Spellmeyer in a statement.
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