• by Wendy Davis  @wendyndavis, April 25, 2024

An administrative law judge has issued an opinion that could slow down the Federal Trade Commission's effort to issue rules that would enable consumers to easily cancel subscriptions that automatically renew.

In a “recommended decision” issued earlier this month, in-house judge Carol Fox Foelak found that complying with the FTC's proposed rules would cost businesses in the U.S. at least $100 million. That finding is significant because the FTC is supposed to conduct an in-depth economic analysis of the potential impact of rules that would affect the economy by $100 million or more.

It wasn't immediately clear whether the FTC would accept Foelak's recommendation, or reject it and move forward without additional analysis of the proposed regulations.

Foelak's opinion stems from the FTC's March 2023 proposed “click to cancel” rules -- which would require companies to offer consumers a simple cancellation mechanism, and allow them to cancel subscriptions through the same medium that was used to purchase them.

The proposal drew opposition from organizations including the Interactive Advertising Bureau and NCTA--The Internet & Television Association, and the think tank TechFreedom.

Among other objections, the Interactive Advertising Bureau said the potential rules could hinder companies that offer simple cancellation mechanisms but “failed to make their cancellation mechanism symmetrical to their sign-up experience.”

Lartease Tiffith, executive vice president for public policy at the online ad group, argued to Foelak at an informal hearing earlier this year that the proposal would affect the economy by more than $100 million.

Foelak agreed, noting that the FTC had estimated that 106,000 businesses currently charge recurring subscription fees. The judge essentially found that compliance costs -- such as fees for lawyers and website developers -- realistically would amount to more than $100 million.

The IAB's Tiffith praised Foelak's recommendation, stating: “It’s clear the FTC overstepped its boundaries and underestimated the costs of these changes to popular services.”