The Federal Trade Commission is urging a court to reject a request by the Interactive Advertising Bureau and others to block the new click-to-cancel rules, which aim to enable consumers to easily cancel recurring subscriptions to newspapers, gyms, retailers and other businesses
Those rules will address "widespread" practices that currently leave consumers “stuck paying for subscriptions they no longer want,” the FTC argues in papers filed Friday with the 8th Circuit Court of Appeals.
The FTC's click-to-cancel rules require companies to offer subscribers a simple cancellation mechanism, and let consumers cancel subscriptions through the same medium that was used to purchase them. In practice, those requirements mean that companies that let people use an online platform to subscribe must also let people cancel online.
The regulations -- which were approved by a 3-2 vote, with Republican commissioners Melissa Holyoak and Andrew Ferguson voting against them -- will take effect January 19, unless blocked in court.
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Business groups including the IAB, NCTA -- The Internet & Television Association, Michigan Press Association and Chamber of Commerce are suing to block the rules. The organizations claimed in papers filed earlier this month with the 8th Circuit that the FTC lacked authority to issue the regulations, and have asked the appellate court to prevent them from taking effect.
The business associations also argued that their members will have to incur “significant” costs to comply with the rules, and that they “will backfire in many cases.”
“Customers might inadvertently click to cancel their home security, telephone, internet, or other critical services -- or third parties, without authorization to cancel, might do so,” the challengers contended.
The FTC disputes those claims. Among other arguments, the agency says its authority for click-to-cancel regulations stems from its power to regulate deception practices, and that any compliance costs incurred by businesses are outweighed by the need to protect consumers from “pervasive” unfair practices.
“The Commission cited evidence that many consumers are unknowingly enrolled in recurring bill programs, denied refunds for goods they never ordered, subjected to onerous cancellation requirements, and inundated with upsell attempts before being allowed to cancel,” the agency wrote.
The IAB and other challengers are expected to file a written response with the court by January 3.