FTC Rule Canceled by Industry Group

By Jody Godoy

(Reuters) – An industry group representing cable and internet providers, along with two others, filed a lawsuit on Wednesday to block a U.S. Federal Trade Commission (FTC) rule requiring simple subscription cancellation mechanisms.

The NCTA – The Internet & Television Association and other groups representing home security and online advertising industries stated in legal papers filed with the 5th U.S. Circuit Court of Appeals in New Orleans that the "click to cancel" rule oversteps the FTC's authority and lacks sufficient supporting evidence.

A spokesperson for the FTC declined to comment on the lawsuit.

The FTC finalized the rule on October 16 after reviewing thousands of comments from individuals, industry groups, and consumer advocates.

The Electronic Security Association, Interactive Advertising Bureau, and NCTA previously criticized the rule as overly broad in their comments.

NCTA represents major cable and internet providers, including Charter Communications (NASDAQ: CHTR), Comcast Corp (NASDAQ: CMCSA), and Cox Communications, alongside media companies like Disney Entertainment and Warner Bros. Discovery (NASDAQ: WBD).

The new rule mandates that businesses obtain consumers' consent for subscriptions, auto-renewals, and free trials that convert to paid memberships. The cancellation method must be "at least as easy to use" as the sign-up process.

Additionally, it prohibits requiring consumers who signed up via an app or website to use a chatbot or agent for cancellation. Companies must also provide cancellation options by phone or online for in-person signups.

The 5th Circuit is a preferred venue for business groups challenging agency actions, with twelve of its seventeen active judges appointed by Republican presidents, including six by former President Donald Trump.