Industry Groups Sue to Stop the FTCs Click-To-Cancel Rule

Cable and internet providers, home security companies, and advertisers are suing the U.S. Federal Trade Commission (FTC) over the proposed rule around canceling subscriptions.

Many companies make you jump through endless hoops to cancel a subscription. As a result, some people give up and continue paying for a service they no longer need. The FTC’s new rule wants to put an end to this by requiring companies to make it easy to unsubscribe as it is to purchase a subscription in the first place. That's especially true for auto-renewals and free trials that automatically convert into paid memberships after the trial expires. The FTC finalized the new rule on October 16, with the aim of going into effect in 180 days.

But now, groups representing the home security, cable and internet, and online advertising industries have filed a complaint with the 5th U.S. Circuit Court of Appeals in New Orleans, arguing there’s no merit to the proposed rule. The Internet & Television Association (NCTA), the Electronic Security Association (ESA), and the Interactive Advertising Bureau (IAB) wrote in the filing that the rule is “arbitrary, capricious, and an abuse of discretion.”

These industry groups represent service providers like Comcast, Charter, and Cox, studios such as Disney, AMC, Paramount, and Warner Bros. Discovery, as well as those that advertise like Google, Netflix, Amazon, Meta, Vizio, and the NFL. The filing claims the FTC’s rule amounts to attempts to “regulate consumer contracts.” It is no coincidence that the complaint was filed with the New Orleans appeals court, which is well-known for favoring corporations in such lawsuits.

“The big businesses that deploy deceptive subscription models to trap customers are trying to sue their way out of this regulation to lower costs for millions of consumers,” Liz Zelnick, director for the watchdog group Accountable.US said in a statement. “We’ve seen this movie before, with big industry players venue shopping in a corporate-friendly jurisdiction regardless of the impact on Americans.”

If the rule is passed and becomes law, companies will need to permit people to stop their subscription the same way they signed up for it, with cancelation “at least as easy to use” as the signup process. “Companies shouldn’t be able to trick you into paying for subscriptions that you don’t want,” Commission Chair Lina M. Khan said in a press release.

For example, if you've subscribed to a product or service online, there ought to be an easy way to stop your recurring subscription online without being forced to call support agents, use chatbots, or fill out web forms. And if you signed up in person, companies must allow you to cancel a subscription by phone or online. Even if you don’t want to cancel a subscription, you should fake it nonetheless in order to get better offers.

By moving to sue, these industry groups can delay or even derail the rule. We hope the FTC will prevail, because many subscriptions are absurdly difficult to cancel by design, employing dark patterns to discourage you from unsubscribing.

Source: Reuters, USA Today, FTC