### Companies Challenge FTC's New "Click-to-Cancel" Rule with Lawsuits

In a move to stop a federal regulation designed to simplify service cancellations for consumers, major cable companies, advertising firms, and newspapers have taken legal action against the Federal Trade Commission (FTC). The agencies filed lawsuits shortly after the FTC approved a rule mandating businesses to provide easy mechanisms for consumers to end recurring charges immediately.

A coalition, including the cable lobby group NCTA-The Internet & Television Association and the Interactive Advertising Bureau (IAB), brought a case to the conservative-leaning US Court of Appeals for the 5th Circuit. They argue that this is the appropriate venue since their co-plaintiff, the Electronic Security Association, which includes companies like ADT, is based in Dallas.

Simultaneously, another lawsuit was launched in the 6th Circuit by the Michigan Press Association and the National Federation of Independent Business. The coordinated nature of the filings is evident as both complaints use identical language to criticize the FTC rule, characterizing it as an overreach that imposes new regulatory burdens across all industries and sectors involving ongoing subscriptions.

The plaintiffs argue that the "Final Rule" improperly designs "negative option" contracts—understood to affect over a billion paid subscriptions in the US—as inherently deceptive unless they align with stringent new guidelines on disclosures, consent requirements, and service cancellation protocols. They assert that the FTC's order is capricious and exceeds its statutory authority, violating the US Constitution and the Administrative Procedure Act.

While the FCC hasn't commented on the lawsuits, enforcement of this rule is set to begin 180 days after its official publication. The outcome of these legal battles could hinge on which court the Judicial Panel on Multidistrict Litigation selects to manage the case.

The NCTA has been vocal about their discontent with the rule, particularly its impact on their ability to persuade customers not to cancel services. NCTA CEO Michael Powell emphasized potential customer misunderstandings about cancellation consequences and argued that mandatory disclosure and consent regulations impinge on First Amendment rights.

The Interactive Advertising Bureau echoed these concerns, arguing the rule would stifle innovation without providing tangible consumer benefits and restrict companies' ability to adapt services according to customer needs.

Despite these challenges, the FTC has remained resolute, adopting the proposed rule with minimal changes. The rule targets "negative option" features, aiming to prevent deceptive marketing by ensuring consumers are well-informed before committing to any recurring charges and requiring their explicit consent.

FTC Chair Lina Khan justified the policy by highlighting the frequent frustration consumers face when trying to cancel subscriptions. "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," noted Khan.

As the FTC prepares to defend its regulatory authority in court, the ramifications of this rule battle will be closely followed by industries reliant on subscription models and consumers eager for simpler service cancellation processes.