Three industry groups in the US are suing the FTC to try and block the ‘Click to Cancel’ rule that would make canceling subscriptions easier. If enacted, the rule could force companies to eliminate multiple hurdles subscribers face while canceling their subscriptions.
Which US industry groups are suing the US FTC and why?
An industry group representing cable and internet providers, a group representing home security, and one representing online advertising industries are collectively suing the U.S. Federal Trade Commission.
The Electronic Security Association, Interactive Advertising Bureau, and NCTA have filed comments criticizing the rule as overly broad. They are essentially attempting to block a new rule enacted by the FTC. Technical jargon aside, the new rule requires companies to offer simpler mechanisms to cancel subscriptions.
The three groups have collectively filed papers with the 5th U.S. Circuit Court of Appeals in New Orleans against FTC. They have reportedly claimed the ‘Click to Cancel’ rule, “oversteps the FTC’s authority and was not supported by evidence.”
The trio has alleged the FTC’s rule is “arbitrary, capricious, and an abuse of discretion. [FTC is trying to] regulate consumer contracts for all companies in all industries and across all sectors of the economy.”
How will the new rule help American consumers or subscribers?
Proposed last year, the Click to Cancel rule reportedly builds upon the Negative Option Rule, which forbids businesses from forcing customers to follow convoluted methods while canceling their subscriptions. Essentially, the rule states businesses cannot make customers cancel services using a method that differs from how they signed up.
Currently, many companies in the US, and other regions, have designed complex methods for canceling subscriptions. Signing up for a subscription is easy. However, canceling a subscription is very difficult. It may require calling a customer service number, writing a letter, or even showing up in person at a designated location.
The Click to Cancel rule attempts to do away with such devious practices. It essentially requires companies to have simpler and quicker methods of cancellation, preferably online, and with as few clicks as possible. Interestingly, the rule has far-reaching scope. In other words, it applies to any automatically renewing subscription.
Needless to say, companies like Netflix, and Disney+, could make canceling subscriptions a one-click affair. However, by simplifying the cancellation process, such services could risk losing many subscribers.
