The NCTA, an industry group representing telecom giants like Comcast and Charter, has initiated a lawsuit against the FTC’s new “click-to-cancel” rule, claiming it exceeds the commission’s authority. The suit was filed in the 5th U.S. Circuit Court of Appeals in New Orleans, a venue often viewed as favorable to conservative arguments.
The “click-to-cancel” rule mandates that subscription services must make canceling as easy as signing up, simplifying consumer interactions with recurring services. The telecom industry, however, argues that the rule is overly broad and undermines their business models.
In addition to the NCTA, other industry organizations, including the Interactive Advertising Bureau and the Electronic Security Association, have joined the lawsuit. These groups represent the online advertising and home security sectors, respectively, and argue that the FTC’s rule disrupts established business practices that they claim benefit consumers.
Telecom Giants Sue FTC Over ‘Click-to-Cancel’ Rule, Arguing Regulatory Overreach
The groups call the rule “arbitrary” and “an abuse of discretion,” contending that more complex cancellation processes may offer consumers useful reconsideration periods before ending service.
The selection of the 5th Circuit as the venue has sparked debate, given its reputation as a highly conservative court. Known for decisions that limit federal regulatory power, this court recently ruled against actions by federal entities, including banning the White House from urging social media companies to remove misinformation and invalidating the Consumer Financial Protection Bureau’s funding model.
Several of these rulings were later reversed by the Supreme Court, underscoring the 5th Circuit’s tendency toward decisions that challenge federal interventions.
Consumer advocacy groups, such as Accountable.US, criticize the lawsuit as “venue shopping” by industry giants, aimed at finding a court more likely to rule in their favor. These advocates argue that large corporations are seeking to circumvent a rule meant to protect consumers from subscription traps and difficult cancellation processes.
Liz Zelnick from Accountable.US argued that telecom and advertising companies are using legal maneuvers to block regulations that simplify life for everyday Americans, reflecting a trend where corporations strategically target sympathetic courts to block unfavorable rules.
The FTC ratified the “click-to-cancel” rule on October 16, following a party-line vote. The rule aligns with FTC Chair Lina Khan’s commitment to consumer protection, aiming to save people time and money by eliminating deceptive practices that trap consumers in subscriptions.
The Biden administration has expressed support, stressing that consumers should not be forced to jump through hoops to cancel services they no longer want. This regulation is seen as a major consumer protection measure, despite ongoing resistance from powerful industry players.
