Seems like an almost intentional mistake tbh
From the abstract:
…the Commission failed to follow procedural requirements under § 22 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 57b-3(b)(1)
A more detailed explanation: The Commission’s formal rulemaking authority is found in § 18 of the FTC
Act. Section 18 authorizes the Commission to adopt “rules which define with
specificity acts or practices which are unfair or deceptive acts or practices in or
affecting commerce” within the meaning of § 5, as well as “requirements prescribed
for the purpose of preventing such acts or practices.” 15 U.S.C. § 57a(a)(1)(B)
(emphasis added).
…
Besides the specificity and prevalence requirements, § 18 requires a number
of procedural steps, some of which go beyond those required for APA notice-and-
comment rulemaking. The FTC must first publish an “advance notice of proposed
rulemaking” containing “a brief description of the area of inquiry under
consideration, the objectives which the Commission seeks to achieve, and possible
regulatory alternatives under consideration.” 15 U.S.C. § 57a(b)(2)(A). Also
required is a notice of proposed rulemaking “stating with particularity the text of the
rule, including any alternatives, which the Commission proposes to promulgate, and
the reason for the proposed rule.” Id. § 57a(b)(1)(A). Interested parties must be
afforded the opportunity for “an informal hearing” and to “to submit written data,
views, and arguments” on the proposed rule. Id. § 57a(b)(1)(B)-(C), (c).
Congress further required the Commission to conduct regulatory analyses of
proposed and final rules, or amendments to rules, at two stages of the rulemaking
process. First, when the Commission publishes a notice of proposed rulemaking, it
also must issue a “preliminary regulatory analysis” containing “a description of any
reasonable alternatives to the proposed rule which may accomplish the stated
objective of the rule” and for the proposed rule and each alternative, “a preliminary
analysis of the projected benefits and any adverse economic effects and any other
effects, and of the effectiveness of the proposed rule and each alternative in meeting
the stated objectives of the proposed rule.” 15 U.S.C. § 57b-3(b)(1)(B)-(C).
Second, the Commission must issue a “final regulatory analysis” when it
promulgates a final rule. 15 U.S.C. § 57b-3(b)(2). Similar to the preliminary
regulatory analysis, the final regulatory analysis must include a description of
alternatives considered by the Commission and an analysis of projected benefits and
adverse economic and other effects. The Commission must also provide “an
explanation of the reasons for the determination of the Commission that the final rule
will attain its objectives” and a “summary of any significant issues raised by the
comments submitted . . . in response to the preliminary regulatory analysis.” Id.
§ 57b-3(b)(2)(B)-(E). Importantly, the preliminary and final regulatory analysis
requirements do not apply to “any amendment to a rule” unless the FTC estimates that
the amendment “will have an annual effect on the national economy of $100,000,000
or more.” Id. § 57b-3(a)(1)(A).
Notice all of the steps. “advance notice of proposed rulemaking”, “notice of proposed rulemaking”, “preliminary regulatory analysis”, “an informal hearing” plus the ability of concerned parties “to submit written data, views, and arguments” to the FTC, and a “final regulatory analysis”. The court draws our attention to the fact that the FTC never did either of the regulatory analysis steps, and points out that they are required.The FTC had opted out of doing those analyses on the basis that the new rule would have an annual impact of less than a hundred million dollars. The court however notes that this is quite unlikely:
Based on the FTC’s estimate that 106,000 entities currently offer
negative option features and estimated average hourly rates for professionals such as
lawyers, website developers, and data scientists whose services would be required by
many businesses to comply with the new requirements, the ALJ observed that unless
each business used fewer than twenty-three hours of professional services at the
lowest end of the spectrum of estimated hourly rates, the Rule’s compliance costs
would exceed $100 million. Such an estimate was “clearly unrealistically low
inasmuch as there are several new requirements proposed that would require changes
in existing practices and/or disclosure forms.”
Thus the FTC erred when it skipped these steps. The remedy is to vacate: Section 18 of the FTC Act directs that a reviewing court “shall
hold unlawful and set aside the rule” if it finds agency action to be “without
observance of procedure required by law.” 15 U.S.C. § 57a(e)(3); 5 U.S.C.
§ 706(2)(D). “The ordinary practice is to vacate unlawful agency action.” United
Steel v. Mine Safety & Health Admin., 925 F.3d 1279, 1287 (D.C. Cir. 2019).
This doesn’t mean that the rule is unconstitutional, just that the FTC has to actually do things correctly. The court hasn’t ruled on the law itself because it is moot.Gotta laugh at the threshold being USD100M costs to the affected businesses without the law taking into account how much the annual costs to consumers are, assuming the continuation of the practices.
Maybe you saw something in the quoted text that I didn't but I understood the USD100M to mean the costs that would arise due to companies who are currently utilising these practices stopping those practices. There's not an ongoing cost to those companies unless you call the deprivation to them of the revenue they shouldn't be receiving because their customers no longer wish to buy the service a cost.
> After all, those costs are eventually going to be passed down to consumers
And when they are the consumers will be able to stop buying off those companies, well, I mean, as long as they can cancel their subscription.
No, Congress put in the hundred million rule to protect honest companies from overly–complicated rules meant to weed out the dishonest. The analysis is intended to force the FTC to consider alternative rules and pick the simplest one that will work.
As you point out, the dishonest companies aren’t going to bother following the rules, so new rules don’t impose any costs on them. Even Congresscritters can understand that.
> I would have hoped that, as well as considering what the costs are to the suppliers, the law might also have taken into account the size of the injury being suffered by consumers…
Yea, there’s an argument to be made in favor of that. You could contact your local Congresscritter and ask them to propose an amendment, but I would first consult the Congressional record to read up on the debate at the time the law was passed. I am sure something like this would have been proposed, and it might be useful to know why the law ended up the way it is. It might just have been simpler to get everyone to agree to a number than to a formula. Eliminating unnecessary complexity is the point, after all. I think this section was last amended in 1980, but I might be wrong…