Business
Commentary: How Big Business killed the 'click-to-cancel' FTC rule, which would have saved consumers billions
When consumers are asked to identify their most frustrating interaction with businesses, the obstacles to canceling an automatically-renewing service invariably rank high.
Some companies require cancellations to be done by phone, or even in person. Even finding a cancellation option on a merchant’s website can be daunting. Cancellation can require multiple steps online, or waiting for hours on hold — before a call just gets dropped without warning.
Millions of consumers have ended up paying unwittingly for services or goods they no longer want or need, sometimes for years.
So unsurprisingly, the Federal Trade Commission last year finalized a “click to cancel” rule, requiring that it be as easy to cancel a recurrent subscription as it is to sign up.
Everything wants to be a subscription now. Firms have identified this as a key revenue source.
— Ex-FTC Chair Lina Khan
Also unsurprisingly, the rule came under immediate attack from Big Business, via a federal lawsuit filed last year by the U.S. Chamber of Commerce and other business lobbies.
Possibly most unsurprisingly, a three-judge appeals court panel in St. Louis (two appointed by Trump and one by George H.W. Bush) threw out the rule on Tuesday — less than a week before it was to take effect and after more than five years of painstaking administrative and regulatory work — on a legal technicality.
Whether the rule will be resurrected by today’s FTC is unclear; the commission told me by email it’s still “considering our options.” The FTC’s two GOP commissioners — including Andrew Ferguson, who was elevated to the chairmanship by Donald Trump in January — dissented in the 3-2 vote last year to make the rule final. Ferguson succeeded Biden appointee Lina Khan, who told podcaster Pablo Torre last month that the rule had “enormous support” from the public.
The commission has sued several companies over their automatically-renewing subscription services, including Amazon, Adobe and Uber, which it sued as recently as April. Those cases are pending.
In announcing the Uber lawsuit, Ferguson observed that “Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel” and said the commission “is fighting back on behalf of the American people.”
Before delving more deeply into the court’s ruling, here’s some background on why the rule was drafted in the first place.
Its target was “negative option” programs, in which businesses assume customers have consented for automatic renewals unless the customers explicitly cancel. These programs were pioneered by book-of-the-month clubs and similar others, which delivered merchandise to members unless the members told them to skip their monthly offerings.
When the FTC first moved against this practice with a 1973 rule, its quarries were 72 book clubs and four record clubs. The practice mushroomed, especially during the pandemic, when people signed up for automatic deliveries of goods or streamed entertainment so they wouldn’t have to leave the house.
By 2022, businesses were making a mint from auto-renewals, relying on “lapses in consumer memory and on a lack of fluency with technology,” as 11 law professors told the appeals judges in a friend-of-the-court brief.
Seniors who forget what they have signed up for and can’t easily navigate online procedures and parents of young children who get snared into signing up for subscriptions tend to be the most common victims.
Opinion polls revealed that more than half of all consumers had faced unwanted charges at some point from these programs. Almost three-quarters of respondents to a survey by JPMorgan Chase said they were wasting more than $50 a month on automatic payments for goods or services they no longer needed. A cottage industry of firms purporting to help consumers track down their forgotten subscriptions sprung up — typically operating on the same subscription model.
Think all this was accidental? Think again.
When the FTC started investigating negative option programs, “we were stunned to see just how deliberate a business strategy it is,” Khan, who oversaw the regulation’s development, told Torre.
In 2019, the FTC began working on expanding its 1973 regulation of book clubs to cover all forms of negative option marketing and published a final rule last November. The rule required businesses to clearly disclose all costs and terms of their programs, to obtain explicit enrollment consent from customers and to provide a means of cancellation that is “at least as easy to use” as signing up. In other words, if it took two clicks to sign up, it would have to take no more than two to cancel.
In a parallel effort, in 2023, the FTC sued Amazon over the enrollment and cancellation procedures for its Prime memberships, which afford enrollees discounted shipping fees and access to Amazon’s video and music streaming services for annual or monthly fees.
The agency asserted that the giant online retailer had “knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime” and “knowingly complicated the cancellation process for Prime subscribers who sought to end their membership.”
Amazon enticed nonmember customers into signing up for Prime by showering them with repeated come-ons while they tried to finalize a purchase, the FTC said. Some of these messages, the FTC said, obscured that customers who responded to seemingly free offers were actually signing up for Prime.
After the FTC told Amazon it was investigating its approach, the company made the signup process more transparent. The agency asserted, however, that even after internal analyses showed Amazon executives that having customers “sign up without knowing they did” was a major “customer problem,” higher-ups pushed back against efforts to clarify the sign-up process online.
The reason, the agency said, is that the “clarity improvements” drove subscription numbers down. Prime executives ultimately “pulled the plug” on the changes, the FTC said.
Perhaps more frustrating for consumers was what the FTC labeled the “labyrinthine” procedure to cancel Prime memberships. This was known inside Amazon, the FTC said, as the “Iliad flow,” a term that evokes the seemingly endless Trojan War as described in Homer’s epic. It was, as the agency laid it out, a “four-page, six-click, fifteen option” cancellation process.
Amazon pared down the process in early 2023, shortly before the FTC filed its lawsuit but after the agency sent it civil investigative demands — a form of subpoena — related to the signup and cancellation processes.
In its answer to the lawsuit, Amazon said that its signup and cancellation procedures complied with federal law by “prominently and repeatedly disclosing key terms, obtaining express informed consent from consumers, and offering a simple cancellation method.” The company also disputed the FTC’s “characterization” of its enrollment and cancellation practices.
The claims in the FTC lawsuit, the company said, are “factually unsupported, legally unprecedented, and wholly antithetical to the FTC’s mission of protecting consumers.” It said that it had established an internal team to analyze customer complaints, and that although the team’s studies arose from “anecdotal feedback expressed from a relatively small number of customers,” it “took that feedback seriously” and made efforts to address the concerns.
The FTC lawsuit is currently scheduled to go to trial in Seattle on Sept. 22.
Businesses that fear the sting of the FTC’s crackdown maintained that the agency had been trying to stamp out a consumer benefit. Auto-renew terms, argued purveyors of home service contracts in a friend-of-the-court brief, appreciate automatic renewals “because they take one thing off their plate given busy workdays, hectic family schedules, or other demanding circumstances.”
The appeals judges expressed some empathy with the victims of marketing scams. “We certainly do not endorse the use of unfair and deceptive practices in negative option marketing,” they wrote.
But they subjected the commission’s rulemaking procedure to pitiless quibbling. The commission had failed at one point to issue a “preliminary” regulatory analysis of its proposed rule, as required by law in some cases. But the FTC did issue a “final” analysis, which was available for public comment.
Yet there could be little in a preliminary analysis that the final analysis wouldn’t cover, and businesses had every opportunity to pick it apart (as they did). Nevertheless, because of the FTC’s shortcut, the judges said, the business community “lost a notable opportunity to dissuade the FTC” from issuing the rule.
Is that plausible? Industry could hardly be unaware that the rule was under consideration; businesses had mobilized to protect negative option marketing starting at least in 2019, and they hardly lacked for resources to “dissuade” the commission.
This ruling looks more like a reflection of the observation of Dickens’ Mr. Bumble in Oliver Twist: “The law is a ass.” The rule addressed a known consumer abuse that had received bipartisan condemnation in Congress over the years. In developing the rule, the FTC solicited public comment at virtually every stage.
Moreover, the rule addressed a marketing process that is destined to keep mushrooming. Companies that used to market their products on a buy-once, use-forever basis have turned to subscription models that allow them to collect fees once a month or annually into the limitless future. If buyers forget that they subscribed and don’t notice the regular charges on their credit card or bank statements, so much the better.
“Everything wants to be a subscription now,” Khan told Torre. “Firms have identified this as a key revenue source, and they’ve noted that to fully monetize that, they need to make it as easy to sign up and as difficult to cancel” as they can. So they implemented “explicit strategies to make that happen.”
Three conservative judges have given those strategies new life. It’s up to the FTC to make its chairman’s promise a reality.
Residents of Monterey Park voted overwhelmingly to ban data centers on election day, making the San Gabriel Valley city the first in the nation to do so by public vote.
As of Wednesday, 86% of votes were in favor of Measure NDC, the city ban, according to the Los Angeles County registrar-recorder/county clerk.
Other cities and towns have passed moratoriums on data centers, as a wave of opposition sweeps the country. But the Monterey Park vote can only be overturned by another ballot measure, making it the most permanent data center ban in a jurisdiction.
Monterey Park’s City Council had already banned data centers by ordinance, after a proposed 247,000-square-foot data center met an outpouring of public anger and concern. The developer withdrew that plan.
That facility would have been less than 500 feet away from the nearest home, and would have used three times the electricity of the entire 60,000-person city. Residents said it would have caused noise and air pollution and driven up electricity rates.
“This ensures long-lasting protections for current and future generations,” Amy Wong, co-founder of the group San Gabriel Valley Progressive Action, said of the vote. “It means that future city councils cannot overturn a data center ban, even if data center developers wanted to spend money to fund pro-data center candidates.”
The measure had no formal opposition. The developer of the proposed facility, investment firm HMC StratCap, said it wouldn’t engage in the ballot fight when it withdrew in March.
The Data Center Coalition, an industry trade group, expressed disappointment in the vote.
“It sends a signal that the area is closed for business, both for data centers and for other significant economic development projects,” state policy director Khara Boender said.
“It deprives local residents of the opportunity to compete for jobs and investment, while also causing the area to relinquish substantial long-term economic investment, high-wage jobs, and critical tax revenue to neighboring areas or other states.”
SGV Progressive Action worked with hyperlocal groups including No Data Center Monterey Park to rally support for the measure.
The group is now focused on stopping data center proposals in the City of Industry and fighting a move by City of Industry, Santa Fe Springs, Vernon and City of Commerce to welcome data centers and other industry with fast-tracked permitting and tax incentives.
City of Industry, in the San Gabriel Valley, and Vernon, south of downtown L.A., are primarily industrial areas, each with around 300 permanent residents. They are employment centers, and tens of thousands of workers commute in daily.
There has been little vocal opposition to data centers among the few residents of these cities. Wong said the protest is primarily coming from the surrounding neighborhoods.
“If a data center gets built in City of Industry, residents across the region would bear the brunt of pollution and increased utility costs,” Wong said, noting that it is surrounded by 16 other cities and unincorporated communities.
Data center proposals have been limited in California compared to Virginia, Texas, Georgia, Illinois and Arizona, which sit at the center of a recent boom in hyperscaler facilities to power artificial intelligence.
California has the third-most data centers in the country, with 300, but high electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in other hotspots.
That doesn’t mean opposition hasn’t been fierce. In Coachella and Imperial County, residents are showing up in droves to protest local proposals.
In the San Gabriel Valley, Montebello, El Monte and Baldwin Park have all enacted temporary moratoriums, and Alhambra recently banned data centers as part of a zoning code update.
Wong said she hoped the ballot measure vote would galvanize the opposition. “The vote is a testament to the people power of our region,” she said. “Our region is worth protecting, and we won’t let data centers determine our future.”
A rule intended to prevent rent gouging in the wake of the Eaton and Palisades fires has lapsed in Los Angeles County, possibly exposing some renters to hikes.
The executive order that blocked rent increases was issued by Gov. Gavin Newsom amid the devastating wildfires last year. Under the order, landlords couldn’t increase rents by more than 10% above their prefire levels.
The rule, which was supposed to be temporary and was repeatedly extended, ended Friday after a vote to extend it again failed to garner enough votes. Supervisor Lindsey Horvath, whose district includes Pacific Palisades, sounded the alarm in a motion to extend price protections that failed to pass at the Board of Supervisors’ May 19 meeting.
“These price gouging protections continue to be necessary as construction and rebuilding continue, and as thousands of people remain displaced,” the motion said. “Families which signed short-term leases could face drastic price increases of 50% or more without further price gouging protection.”
Los Angeles County is home to more than 1 million rental properties, though not all of them needed protection from the new rule. There are already stricter rent increase caps for many residences, depending on the location, type and age of the building. Despite the rent control in the region, the people of Los Angeles pay among the highest rents in the country.
It is uncertain whether renters will face rapidly rising rents now that the protection has lapsed. But some real estate experts and policymakers said there was no need for the temporary rule that was part of the governor’s state of emergency.
Supervisors Kathryn Barger, Janice Hahn and Holly Mitchell abstained from voting on the motion to extend the protection, while Supervisors Hilda Solis and Horvath supported it.
“I abstained because I did not see sufficient evidence to justify extending this emergency ordinance, nor did I see evidence to eliminate it entirely,” Hahn said.
Barger’s office said she supported allowing the protections to sunset while waiting to see whether new information emerged.
“Market data already shows countywide rents are only about 2% above pre-emergency levels and rental inventory has grown,” Barger representative Helen E. Chavez Garcia said. “The Supervisor is also mindful of the burden these ongoing protections place on small property owners throughout the county.”
Mitchell did not immediately respond to a request for comment.
There haven’t been steep rent hikes in neighborhoods within three miles of the Palisades fire, according to a Times analysis of data from Zillow, the property listing company.
In ZIP Codes within three miles of the Palisades fire, rent increased 4.8% from December 2024 to April 2025. In areas around the Eaton fire, which destroyed swaths of Altadena, rent jumped 5.2% in the same period.
In L.A. County, ZIP Codes farther from the fires saw only about a 2% increase.
A landlords representative, Jesus Rojas of the Apartment Owners Assn. of Greater Los Angeles, told the supervisors during public comment at the meeting that the county’s rent-gouging rules have “long outlived the emergency they were intended to address” and are now being “wrongfully used to harm thousands of rental housing providers throughout the county.”
“There is no proof that multifamily rental housing providers are hugely increasing rents for impacted homeowners,” Rojas said.
Indeed, there are strong signs that the property market in the Los Angeles area has at last begun to cool.
L.A. metro-area rent prices recently fell to a four-year low, with the median rent slipping to $2,167 in December.
Meanwhile, condominium sales had their slowest start of the year in decades. Condo sales in Los Angeles have plummeted to a 20-year low, with fewer than 2,000 units sold in January and February — the worst start to the year since 2005.
Newsom defended the price-gouging protections shortly after they went into effect.
“In the days following the Los Angeles firestorms, we worked quickly to protect Los Angeles survivors from any form of exploitation,” he said in February 2025. “The state has the tools in place to not only block price gouging during this emergency, but also to prosecute bad actors.”
The Los Angeles County Department of Consumer and Business Affairs said it received more than 2,000 complaints after the fires, alleging that retailers and landlords were taking advantage of people put in hardship by their losses, and sent out more than 2,000 cease-and-desist letters to businesses and landlords for alleged price gouging, said Morine Merritt, who oversees department investigations into consumer and real estate fraud.
“Close to 90% of the complaints that we received involved allegations of rent increases,” Merritt said in an interview. Now that the fire-related protections have expired, existing laws and “regular market conditions determine price increases for goods and services, including rents,” she said.
Crackdowns on fire-related rent gouging have been rare, said Chelsea Kirk of the activist organization the Rent Brigade, which analyzed L.A. County’s rental market in the year after the fires. It reported 18,360 potential examples of price gouging in listings but said that few lawsuits had been filed by authorities so far.
Last week, Rent Brigade announced what it said was the first private civil lawsuit brought by a family that claimed to be rent-gouged in the aftermath of the wildfires. Plaintiffs Randall and Candy Renick, whose Altadena home was damaged, said they were charged nearly three times the maximum permitted rate for nearly 10 months. They seek restitution of $96,000 plus civil penalties and attorneys’ fees.
The rental market has probably stabilized since the fires, Kirk said, but other families may still be “locked into illegal rents” that they agreed to pay when they were in a rush to find housing after they were displaced.
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
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