Cable companies ask 5th Circuit to block FTC’s click-to-cancel rule

The FTC declined to comment on the lawsuits today. The agency’s rule is not enforced yet, as it is scheduled to take full effect 180 days after publication in the Federal Register.

Cable firms don’t want canceling to be easy

The NCTA cable lobby group, which represents companies like Comcast and Charter, have complained about the rule’s impact on their ability to talk customers out of canceling. NCTA CEO Michael Powell claimed during a January 2024 hearing that “a consumer may easily misunderstand the consequences of canceling and it may be imperative that they learn about better options” and that the rule’s disclosure and consent requirements raise “First Amendment issues.”

The Interactive Advertising Bureau argued at the same hearing that the rule would “restrict innovation without any corresponding benefit” and “constrain companies from being able to adapt their offerings to the needs of their customers.”

The FTC held firm, adopting its proposed rule without major changes. In addition to the click-to-cancel provision, the FTC set out other requirements for “negative option” features in which a consumer’s silence or failure to take action to reject or cancel an agreement is interpreted by the seller as acceptance of an offer.

The FTC said its rule “prohibits misrepresentations of any material fact made while marketing using negative option features; requires sellers to provide important information prior to obtaining consumers’ billing information and charging consumers; [and] requires sellers to obtain consumers’ unambiguously affirmative consent to the negative option feature prior to charging them.”

The FTC will have to defend its authority to issue the rule in court. The agency decision cites authority under Section 18 of the FTC Act to make “rules that define with specificity acts or practices that are unfair or deceptive” and “prescribe requirements for the purpose of preventing these unfair or deceptive acts and practices.”

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC Chair Lina Khan said. “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.”