The Federal Trade Commission (FTC) earlier this week announced a further delay in enforcing its proposed Negative Option Rule. This rule affects how businesses must process cancellation of subscriptions or ongoing payments. After hearing a full day of testimony, the commission voted unanimously, 3-0, to temporarily delay enforcement because of worries around the high burden of compliance. This decision comes as the FTC seeks to ensure that the rule is practical for businesses selling both physical and digital subscriptions.
Companies should be required to make it easy for consumers to cancel subscriptions. Customers can cancel whenever they like, and in the same manner they initially registered. This is intended to end the confusing tactics used to ensnare consumers into paying for a subscription they don’t want. In a statement, the FTC acknowledged the need for this additional time, emphasizing that “having conducted a fresh assessment of the burdens that forcing compliance by this date would impose, the Commission has determined that the original deferral period insufficiently accounted for the complexity of compliance.”
As you know, several FTC commissioners have recently become involved in legal controversies themselves. Now, they’ve gone and filed a lawsuit against former President Donald Trump. The two argue that the firing acts from his administration broke a landmark 2014 Supreme Court decision. As argued by the commissioners, the president currently cannot willy-nilly fire FTC commissioners at will, he must have cause to do so.
In response to the challenges surrounding the implementation of the Negative Option Rule, the FTC stated, “Of course, if that enforcement experience exposes problems with the Rule, the Commission is open to amending the Rule to address any such problems.” The commission indicated a willingness to amend the proposed rule further. What strikes us is that they are open to making changes based on practical enforcement experiences.
The FTC has prioritized a prudent approach to regulatory changes in the subscription space. This enforcement pause underscores that commitment. Businesses and consumers alike now anxiously await additional guidance. Until then, nonprofits need to be proactive and prepare to follow these new rules when they’re released.
Anthony Ha, weekend editor at TechCrunch, helped to unpack what this ruling means for the future. He delivered these remarks from his platform in New York City. He has a deep history of technology reporting from his years at Adweek. Now, as a senior editor at VentureBeat, his talent brings us detailed and in-depth understanding of how regulations impact consumers and businesses alike. Prior to coming to TechCrunch, he was a local government reporter for the Hollister Free Lance. Moreover, he worked as vice president of content for a venture capitalist fund.
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