The cable television industry’s largest trade group is suing the Federal Trade Commission (FTC) over a new rule that requires most online service providers to offer an easy way for customers to cancel their recurring subscriptions.
The rule, called “click-to-cancel,” was issued by the FTC earlier this month, and requires companies that sell product or service subscriptions or memberships to offer a way for customers to cancel their plans through the web or over the telephone.
If a customer purchases a subscription or membership online, the FTC rule requires that most companies offer an easy way for people to cancel their subscription or membership the same way — and those companies can’t require people to jump through several hoops just to end their plan.
The same goes for companies that offer memberships or subscriptions in other ways — if a company allows people to purchase a subscription or membership in person or over the phone, they must also offer a way for customers to cancel with relative ease.
In a 240-page petition for review filed with the Fifth Circuit U.S. Court of Appeals this week, three trade groups — the NCTA, the Internet & Television Association; the Interactive Advertising Bureau (IAB) and the Electronic Security Association (ESA) — say the federal government is improperly attempting to regulate “consumer contracts for all companies in all industries and across all sectors of the economy,” no matter how a subscription or membership is purchased or what that type of purchase entails.
The NCTA represents some of the largest cable and media companies in the United States, including Comcast (Xfinity, NBC), Charter (Spectrum), Cox Communications, Warner Bros Discovery (WBD), Paramount, AMC Networks and the Walt Disney Company. The IAB includes major stakeholders in the advertising industry, including Meta (Facebook, Instagram), Google, Amazon, Netflix, Adobe, Allen Media Group, Bloomberg and newspaper company MediaNews Group (Digital First Media).
The groups argue that the new rule creates a requirement that could be too burdensome for many businesses. It also says the FTC appeared to be exceeding its authority under the Administrative Procedure Act. That claim has come up a lot since the U.S. Supreme Court overturned the “Chevron Deference,” which opened the door for legal challenges that question the authority of such federal agencies to create and impose new regulations, absent an act of Congress.
The groups offered no reason why they brought their legal challenge to the Fifth Circuit Court of Appeals, when — theoretically — it could have been filed anywhere. Some have speculated the circuit was chosen because the court has a high concentration of Republican-appointed magistrates and judges, who are more likely to side with commercial organizations over government regulators in cases like the one being brought against the FTC.
