A federal appeals court has struck down the Federal trade Commission’s (FTC) ‘click to cancel’ rule, which would’ve required companies to provide users with simple cancellation mechanisms to immediately halt all recurring charges and get their consent to convert auto-renewals and free trials to paid enrolments.

The FTC was set to begin enforcing the rule on July 14th. The measure was implemented as part of a broader crackdown on deceptive subscription practices. In 2023, the agency sued Amazon for allegedly duping consumers into signing up for its Prime service and then impeding them from cancelling.

In their ruling, the US Court of Appeals for the Eighth Circuit found that the FTC skipped a key procedural requirement in implementing the initiative. This deprived companies of the opportunity to dissuade the agency from adopting it, the court said.

“While we certainly do not endorse the use of unfair and deceptive practices,” the court said that the “procedural deficiencies of the Commission’s rulemaking process are fatal here.”

It added: “The opportunity to be heard earlier on” could’ve “impacted the Commission’s decision-making on the scope of the final rule and on whether alternatives, which would have received more substantive consideration by the Commission and regulated entities, were indeed viable.”

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Categories: Articles, Policy, Regulation

Tags: Amazon, FTC, usa