NCTA, the Internet & Television Association representing major cable and internet providers, and home security and online advertising industry groups are suing to block the Federal Trade Commission's "Click to Cancel" rule. This rule mandates that companies provide easy, one-click cancellation options for consumers.
In the lawsuit, filed with the 5th U.S. Circuit Court of Appeals in New Orleans, the groups argued that the FTC overstepped its authority to impose the rule and has no right to dictate to companies on how to handle cancellations, Reuters reported.
Earlier this month, the FTC finalized the "Click to Cancel" rule following a review of thousands of comments from various stakeholders, including individuals, industry groups, and consumer advocates.
At the time, Commission Chair Lina M. Khan said: "Too often, businesses make people jump through endless hoops just to cancel a subscription," adding that "the FTC's rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want."
In the complaint, the three plaintiffs -- Electronic Security Association, Interactive Advertising Bureau, and NCTA -- called the rule "arbitrary, capricious, and an abuse of discretion."
NCTA represents Charter Communications, Cox Communications, and Comcast Corp., as well as Disney Entertainment and Warner Bros. Discovery.
The new rule mandates that retailers, gyms, and other businesses obtain consumers' consent for subscriptions, auto-renewals, and free trials that convert to paid memberships. Additionally, the cancellation process must be "at least as easy to use" as the signup process.
The rule also prohibits companies from requiring consumers who signed up through an app or a website to go through a chatbot or agent for cancellation. For those who sign up in person, companies must offer cancellation options by phone or online channels.
The FTC rule is part of President Joe Biden's large-scale program to eliminate "junk fees" that subject customers to oppressive regulations. The rule was proposed in September with support from Vice President Kamala Harris. A 3-2 vote approved the rule that uniformly applies to almost all negative option programs in any media.
