FTC hits pause on ‘click to cancel’ rule

(Reuters) – The U.S. Federal Trade Commission is delaying implementation of a rule set to take effect next week that would require businesses to make it as easy to cancel subscriptions and memberships as it is to sign up, to give companies more time to comply, the agency said on Friday.

The rule that has drawn cheers from consumer groups and a lawsuit from business associations was set to take effect on May 14. The FTC will now begin enforcing it on July 14, according to the announcement. The FTC created the rule under former Democratic Chair Lina Khan, but has since defended it from a lawsuit claiming the agency exceeded its authority.

The move shows how the FTC under Donald Trump is seeking to balance the concerns of U.S. consumers, who elected the Republican president on promises of addressing the high cost of living, with complaints from the business community that the agency took too hard a line under Khan.

The rule is based on dozens of enforcement actions and tens of thousands of consumer complaints, the FTC has said.

The rule requires retailers, gyms and other businesses to get consumers’ consent for subscriptions, auto-renewals and free trials that convert to paid memberships. The cancellation method must be “at least as easy to use” as the sign up process, it says.

The rule also prohibits requiring consumers who signed up through an app or a website to go through a chatbot or agent to cancel. For in-person sign-ups, companies must provide means to cancel by phone or online.

The U.S. Chamber of Commerce and a trade group representing major cable and internet providers such as Charter Communications (CHTR.O),  Comcast Corp (CMCSA.O), and Cox Communications [RIC:RIC:COXC.UL], and media companies like Disney Entertainment (DIS.N), and Warner Bros. Discovery (WBD.O), are among those suing to block the rule.