Streaming services and other businesses are suing to block a new rule that would make it easier to cancel subscriptions and memberships.
NCTA – The Internet & Television Association, which represents major cable and internet providers such as Charter Communications and Comcast, as well as media companies such as Disney, and other trade groups say the Federal Trade Commission overstepped its authority with the “click to cancel” rule.
The complaint filed in the 5th U.S. Circuit Court of Appeals alleges the new rule could cover as many as 1 billion paid subscriptions in the United States and is “arbitrary, capricious, and an abuse of discretion.”
The Interactive Advertising Bureau, which represents the online advertising industry, and the Electronic Security Association, which represents the home security industry, are also behind the lawsuit.
The FTC declined to comment.
Under the rule, which passed Oct. 16, businesses must get consent for subscriptions, auto-renewals and free trials that convert to paid memberships. Canceling the services has to be “at least as easy” as signing up, the FTC said.
The FTC rule is part of President Joe Biden’s efforts to crack down on “junk fees.” Vice President Kamala Harris, the Democratic nominee for the White House, talked up the proposed “click to cancel” rule in September.
The rule passed 3-2, with the FTC’s two Republican commissioners voting against it.
While some subscriptions can be canceled with a couple of clicks or a phone call, when companies make it difficult to cancel a subscription, customers can end up with monthly charges long after they no longer want or need a product or service.
Complaints about the difficulty of dropping subscriptions have jumped in recent years. The FTC estimates it receives nearly 70 a day on average.