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The new rules introduced by the regulator are part of the Biden administration’s attempt to tackle ‘junk fees’ for US consumers
After around a year of deliberation, earlier this month the Federal Trade Commission (FTC) introduced new ‘click to cancel’ rules, obligating companies to simplify the process of cancelling subscriptions and memberships.
More specifically, these rules require companies to allow customers to cancel their subscriptions through the same method that they used to sign up; i.e., if you signed up to a service online, you should not be forced to call customer services in order to cancel.
Speaking in an interview at the time, FTC Chair Lina Khan explained that the new rules were in response to the growing number of consumer complaints about services that are “extraordinarily easy to sign up for a subscription, but absurdly difficult to cancel.”
“Companies shouldn’t be able to trick you into paying for subscriptions that you don’t want,” she said.
But while this rule change seems like a clear benefit for consumers, not everyone is happy about it.
The NCTA (The Internet & Television Association), which represents broadband and cable TV companies, has this week announced it is suing to block the ruling, claiming the rule is a regulatory overreach from the FTC.
The lawsuit describes the move as “arbitrary, capricious, and an abuse of discretion,” arguing that a multistep cancellation process protects customers and allows companies to offer them better deals.
The lawsuit is also supported by the Electronic Security Association and the Interactive Advertising Bureau.
It is worth noting here that the ruling has a highly political element, having been passed 3–2 by the FTC, with both the FTC’s Republican commissioners voting against it. The Biden Administration has made it a priority to tackle ‘junk fees’ for consumers, a fact that Republicans decry as placing onerous and unnecessary regulatory handcuffs on the free market.
Perhaps it should come as little surprise, then, that the industry associations’ lawsuit has been filed with the 5th U.S. Circuit Court of Appeals in New Orleans, where 12 of the 17 active judges were appointed by Republican presidents, including six by former President Donald Trump.
Indeed, some supporters of the FTC’s ruling are accusing the associations of ‘venue shopping’ by filing the lawsuit with the most conservative-leaning federal appeals court in the country.
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