In this Payments Dive article, Zach Lerner discusses how a recent court decision to vacate the FTC’s “click-to-cancel” rule will impact merchants and consumers dealing with recurring charges and chargebacks. The Eighth Circuit’s ruling found procedural flaws in how the FTC enacted its update to the Negative Option Rule, which sought to simplify cancellations and reduce disputes.
Zach notes that the FTC’s rule “sought to impose requirements that would put consumers in a better position,” which could have reduced chargebacks. Now, absent federal oversight, “states will continue to fill the void,” he says, with certain states likely to take additional legislative action. Zach also explains that broad and vague language in the rule contributed to business opposition and lawsuits before it was struck down.
