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1 in 5 Americans Affected: Click-to-Cancel Rule Struck Down

A federal appeals court has overturned a “click-to-cancel” rule, which aimed to make it easier for consumers to cancel unwanted subscriptions. According to the US Court of Appeals for the 8th Circuit, the Federal Trade Commission (FTC) failed to follow the full rulemaking process, effectively vacating the rule set to take effect on July 14.

The FTC’s goal was to prevent surprise recurring charges, which affect approximately 1 in 5 Americans. The agency updated its Negative Option Rule in 2022, introducing provisions for material facts disclosure and simple cancellation mechanisms. However, an administrative law judge found that compliance costs would exceed $100 million if businesses used fewer than 23 hours of professional services to implement the rule.

The FTC issued the rule without conducting a preliminary regulatory analysis, which led to the appeals court’s decision to strike it down.

Source: arstechnica.com

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