Although the entire Rule has been vacated, businesses offering negative option programs should remain aware of general unfair and deceptive advertising principles and applicable state law requirements.
Key Points:
- On July 8, the US Court of Appeals for the Eighth Circuit vacated the entirety of the Federal Trade Commission’s (FTC or the Commission) Negative Option Rule (the Rule or the click-to-cancel rule) due to procedural deficiencies in the FTC’s rulemaking process.
- Holding that the FTC’s request for a party-specific vacatur is not feasible, the Court vacated the Rule days before its most onerous requirements were scheduled to go into effect.
- Companies that would have been subject to the Rule are now relieved of its specific compliance requirements, but are still subject to laws targeting negative option programs. These include the Restore Online Shoppers’ Confidence Act (ROSCA) and state autorenewal laws, as well as Section 5 of the FTC Act and analogous state unfair and deceptive trade practices (UDAP) laws.
