Earlier this week, the 8th Circuit Court of Appeals voided the Federal Trade Commission’s (FTC) new rule making it easier for customers to cancel unwanted subscriptions.
Mainers, however, can still expect to see some of the promised benefits under a new law unanimously approved in both chambers of the Legislature and signed by Gov. Janet Mills (D) last month.
State law will now ensure that those who subscribe to various services, including gyms or other health clubs, will be given advance notice prior to the renewal or extension of a subscription, as well as a straightforward method of cancellation that mirrors the sign-up process.
In an effort to reduce unwanted charges for customers, businesses must also obtain express consent before automatically renewing subscriptions, verifying that the subscriber actually wants to continue paying for their services.
Previously set to take effect next Monday, the FTC’s consumer protection rules adopted in October sought to make similar changes nationwide.
According to reporting from the Associated Press, these rules appear to have targeted not only automatic renewals, but also subscriptions linked to free trial offers.
Had these rules taken effect, businesses would have needed to make clear to customers when free trial periods would be coming to end so that they could make more informed decisions.
The 8th Circuit Court of Appeals, however, declared the new rules invalid due to a procedural error.
Any rules expected to have more than a $100 million annual impact on the nation’s economy is required to be preceded by a preliminary regulatory analysis.
Although the FTC argued that the analysis was unnecessary because they did not expect it to have such a substantial impact, an administrative law judge decided that the plan would exceed the $100 million threshold.
“While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission’s rulemaking process are fatal here,” the court wrote.
Samuel Levine, who led the FTC’s consumer protection bureau at the time the rule was originally approved, expressed hope that the agency will continue to work on this issue.
“My hope is that the FTC continues the bipartisan work to make sure subscriptions are as easy to cancel as they are to enroll in,” Levine said, according to the Washington Post.
Maine’s new law, set to take effect later this year, essentially mirrors that which was adopted by the FTC and will be enforced by the state’s Attorney General.
Bill sponsor Sen. Tim Nangle (D–Cumberland) explained in testimony introducing the bill in April that he worked closely with the Revisor’s Office to duplicate the FTC’s language, “ensuring our language aligns with emerging national standards.”
“[This bill] doesn’t prohibit businesses from offering automatic renewals. It just ensures they do so fairly, and that consumers can make informed decisions about where their money goes,” Sen. Nangle said. “That’s what Mainers expect, and that’s what they deserve.”
“I think that the FTC rule is good,” Nangle said in a prior interview with WGME discussing the legislation. “I just would rather have this rule be able to be enforced on the state level so that we’re not relying on the federal government to enforce.”
These changes will take effect in Maine alongside all other non-emergency legislation approved by lawmakers during the most recent legislative session that concluded last month.
