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US Court nullifies FTC requirement for click-to-cancel

(arstechnica.com)
572 points gausswho | 4 comments | 08 Jul 25 22:42 UTC | HN request time: 0.702s | source
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ApolloFortyNine ◴[09 Jul 25 15:53 UTC] No.44511593[source]▶
From the article

>"While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission's rulemaking process are fatal here,"

As with a lot of judge rulings, and what they're always supposed to do, they ruled on what the actual law is and not just on what sounds good.

>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 estimated in a Notice of Proposed Rulemaking (NPRM) that the rule would not have a $100 million effect.

Basically the judges, and a lower court, all agreed that there's no way this rule won't have at last a $100 million in impact, and when something has that much impact there are rules they were meant to follow and didn't. And they rightly commented that if this was allowed to stand, the FTC and every government agency would just always estimate low in these cases.

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gmd63 ◴[09 Jul 25 17:54 UTC] No.44512973[source]▶
I don't buy that argument. The issue is companies deliberately built complexity on top of their existing systems to make it harder to cancel. The added complexity that costs a lot of money to fix is a result of their unfair and deceptive practices.

An enormous amount of deadweight loss would be returned to the economy if they simply implemented a much simpler design of click to cancel and avoided the unfair and deceptive practices in the first place.

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sebzim4500 ◴[09 Jul 25 18:03 UTC] No.44513061[source]▶
Isn't the argument that making it easier to cancel subscriptions means that more customers will cancel and the cumulative effect across the industry will be much more than $100M?
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jakeydus ◴[09 Jul 25 18:07 UTC] No.44513119[source]▶
No, I think that the $100M number comes from the cost of implementing the change, not the impact to the impacted companies' bottom line.
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1. cortesoft ◴[09 Jul 25 18:10 UTC] No.44513153[source]▶
I think the other person is right… the term is “economic impact” not “cost to implement”
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2. jakeydus ◴[09 Jul 25 18:20 UTC] No.44513241[source]▶
That's what I thought too, but from the ruling in the article, it seemed like the justification came from calculating the cost to implement (emphasis on 'compliance costs'.

> But an administrative law judge later found that the rule's impact surpassed the threshold, observing that compliance costs would exceed $100 million "unless each business used fewer than twenty-three hours of professional services at the lowest end of the spectrum of estimated hourly rates," the 8th Circuit ruling said.

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3. CWuestefeld ◴[09 Jul 25 19:41 UTC] No.44514023[source]▶
Well, the two are related. By definition, the economic impact must be at least as much as the cost to implement. So estimating the cost to implement sets a lower bound on the total economic impact.
4. db48x ◴[10 Jul 25 03:00 UTC] No.44516773[source]▶
No, it is only cost to implement the new rules. If this cost is estimated to be above one hundred million dollars, then extra review steps are required. These steps allow the public, and the regulated industry, to suggest alternatives. These alternatives must be evaluated to see if they would be both effective and cheaper for legitimate businesses to implement. If they are, then the FTC is supposed to drop their own proposed rules and adopt the alternative rules instead. This keeps the rules themselves from hurting legitimate businesses; the illegitimate businesses aren’t going to follow the rules anyway.