PDMI Comments Help Push FTC to Narrow Final ‘Click-to-Cancel’ Rules

Proposed save-the-sale restrictions, double opt-in for subscription programs scrapped.

On Wednesday, Oct. 16, the Federal Trade Commission (FTC) announced the passage of new rules covering negative-option and subscription marketing efforts.

While the new rules — now dubbed the “Click-to-Canel” rule by the FTC — still contain many concepts that performance marketers should maintain awareness of, three key items that appeared in the Commission’s initial Notice of Proposed Rulemaking (NPRM) — delivered last year — were removed from the final rule after the PDMI and other industry groups pushed back:

• A prohibition on save-the-sale efforts

• A requirement for consumers to give separate consents to the negative option or subscription feature of a sale and to the overall transaction itself

• And a requirement for negative option/subscription marketers to give annual notices about their renewal programs to customers.

“The PDMI is thrilled that its efforts during the comment process helped protect its members from undue and burdensome new rules that could harm their businesses,” says Thomas Haire, the PDMI’s chief content officer. “While the new rule still contains strong provisions regarding the method of cancellation and an expansion of the concept of material representations beyond those made in the subscription offer itself, ensuring the opportunity for performance marketers and their consumers to have open conversations about their products and services was the paramount idea behind the PDMI’s efforts. In addition, creating the space for brands to offer streamlined purchase and consent processes to their customers is crucial to the success of many of our members.”

Click-to-Cancel Rule Comment Process Pays Off

The PDMI initially submitted comments to the FTC in June 2023 noting the association and its members’ concerns with an array of the proposed new rules. On Jan. 16, Haire delivered an eight-minute comment during a virtual FTC hearing, touching not only on the items above but other areas of concern. The PDMI was one of just six industry groups called upon to present verbal arguments — and the association remained active in further written comments throughout January and February.

The PDMI’s written and verbal comments are referred to throughout the 230-page rule, which passed on a 3-2 party line vote by the commissioners. The new rule is expected to take full force by next April (180 days after publication in the Federal Register, with some limited parts taking effect in just 60 days).

The main facet of the new rules highlighted by the FTC is the “click-to-cancel” aspect that requires “sellers to make it as easy for consumers to cancel their enrollment as it was to sign up.” The FTC’s press release announcing the passage notes the key areas it believes required new or adjusted rules:

“The final rule will provide a consistent legal framework by prohibiting sellers from:

• misrepresenting any material fact made while marketing goods or services with a negative option feature;

• failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature;

• failing to obtain a consumer’s express informed consent to the negative option feature before charging the consumer; and

• failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.”

“The PDMI and its Government Affairs Council will continue to track action around these new rules — and all regulatory efforts affecting performance and direct-to-consumer marketing — acting as needed to protect its members and the industry as a whole,” Haire says.