The FTC has announced that it has submitted an Advance Notice of Proposed Rulemaking (ANPRM) regarding negative option plans to the OMB Office of Information and Regulatory Affairs (OIRA) for review — an indication that the commission may be interested in revisiting click-to-cancel issues. The OIRA has disclosed that it received the ANPRM on February 4.
Once the OIRA completes its review, which under Executive Order 12866 can take up to 10 working days, the FTC can publish the ANPRM in the Federal Register. Until then, the precise details of the information and data that the FTC wants to review before issuing any proposed amendments to the negative option rule will not be publicly available.
However, since the negative option rule is a trade regulation rule, the FTC’s own rules require the ANPRM to describe the aspects of negative option plans on which the FTC is focusing, the objectives the FTC seeks to achieve with any proposed amendments, and possible regulatory alternatives under consideration. The ANPRM must also invite commenters to provide suggestions or to propose alternative methods by which the FTC may achieve its objectives.
It seems likely that the FTC will seek comments on the economic impact of any proposed rulemaking as well, since the FTC is required to perform a regulatory cost-benefit analysis when a proposed rule will have an annual effect on the national economy surpassing $100 million. The FTC’s failure to conduct a preliminary regulatory analysis of costs and benefits is what doomed the prior click-to-cancel amendments to the negative option rule in litigation before a panel of the Eighth Circuit.
In the meantime, state regulators are free to use their UDAP authority under state laws modeled on Section 5 of the FTC Act or their UDAAP authority under Section 1042 of the Consumer Financial Protection Act to attack any subscription practices that they deem to be unfair, deceptive, or abusive to consumers.
In a related development, as we previously reported, New York City Mayor Zohran Mamdani has expressed interest in a plan that would make it easier for city residents to cancel their subscriptions.
Mamdani has issued an Executive Order that:
- Calls for coordination among agencies, including the city’s Law Department and others, such as the New York Attorney General’s Office to “ensure maximum impact in combatting subscription traps.”
- Directs the Department of Consumer and Worker Protection to make recommendations to the City Council on ways to fight “subscription tricks and traps.”
- Empowers the city to use the full tools and authorities to crack down on “subscription tricks and traps.”
- Directs the consumer and worker protection agency to monitor, investigate and enforce violations related to “subscription tricks and traps.”