A “click-to-cancel” rule, which would have required businesses to make it easy for consumers to cancel unwanted subscriptions and memberships, has been blocked by a federal appeals court just days before it was set to go into effect.
The Federal Trade Commission’s proposed changes, adopted in October, required businesses to obtain a customer’s consent before charging for memberships, auto-renewals and programs linked to free trial offers.
The FTC said at the time that businesses must also disclose when free trials or other promotional offers will end and let customers cancel recurring subscriptions as easily as they started them.
The administration of President Joe Biden included the FTC’s proposal as part of its “Time is Money” initiative, a governmentwide initiative that was announced last year with the aim of cracking down on consumer-related hassles.
The FTC rule was set to go into effect on Monday, but the U.S. Court of Appeals for the Eighth Circuit said this week that the FTC made a procedural error by failing to come up with a preliminary regulatory analysis, which is required for rules whose annual impact on the U.S. economy is more than $100 million.
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