Manatt Consumer Protection Partner Bezalel Stern and Associate Bryce Brenda wrote a Law360 article about the Federal Trade Commission’s (FTC) new Negative Option Rule and legal challenges that imperil the Rule.
Under the Rule, most businesses utilizing negative options would be required, among other things, to provide customers with simple cancellation methods and clear disclosures of all terms prior to receiving their billing information. If the Rule survives, the authors wrote, the FTC would have expanded authority to obtain monetary damages and bring action against any company utilizing negative options observed to have any false or misleading practices.
While the Supreme Court will likely be asked to evaluate the Rule regardless of if an appellate court invalidates it, Congress can use the Congressional Review Act to nullify the Rule. “Whether or not the rule survives judicial scrutiny, congressional action could potentially quash its efficacy, likely through the use of the Congressional Review Act,” the authors wrote.
Law360 subscribers can read the full article here.