A federal appeals court has struck down a ‘click-to-cancel’ rule that would have required companies to make canceling services as easy as signing up. The Federal Trade Commission (FTC) rule, which was set to take effect on July 14, was vacated by the US Court of Appeals for the 8th Circuit. The three-judge panel ruled unanimously that the Biden-era FTC failed to follow the full rulemaking process required under US law.
The FTC is required to conduct a preliminary regulatory analysis when a rule has an estimated annual economic effect of $100 million or more. The FTC initially estimated the rule would not reach that threshold, but an administrative law judge later found compliance costs would exceed $100 million. Despite this finding, the FTC did not conduct the required preliminary analysis.
The decision marks a significant setback for the Biden administration’s regulatory agenda, which has sought to enhance consumer protections through increased oversight. The ruling highlights the importance of following proper procedural steps in the rulemaking process, and underscores the potential legal risks of bypassing these steps in the interest of expediency.