The FTC updates include highlights from the FTC’s final amendment to its “click-to-cancel” rule and its proposed order against a company that allegedly violated the Franchise Rule. All this and more after the jump.
October 16, 2024
Bureau of Consumer Protection: Advertising and Marketing, Payments and Billing
- The FTC announced final amendments to its “click-to-cancel” rule requiring sellers to make it easier for consumers to cancel subscriptions. The rule was announced as part of the FTC’s review of its 1973 Negative Option Rule, with the intention of combatting unfair and deceptive practices related to subscriptions, memberships, and recurring-payment programs in a world that prioritizes e-commerce. Under the amended Negative Option Rule, sellers must place information in an easy to find location, be able to show that consumers knew what they agreed to before signing up, and provide a cancellation option that is as simple as it was to sign up. The Commission voted 3-2 to approve publication of the final rule. Violators of this rule may be liable for redress and civil penalties.
Bureau of Consumer Protection: Franchises, Business Opportunities, and Investments
- The FTC filed a complaint against coffee shop franchise Qargo Coffee and its founders (“Qargo”). The complaint alleges that Qargo violated the FTC’s Franchise Rule by failing to give prospective franchisees critical information regarding the risks and benefits of investing in the franchise, engaging in unfair practices, and misrepresenting franchise information to potential prospects. The FTC’s proposed order against Qargo imposes a $1,258,575 judgment, in addition to providing franchisees and licensees the option to rescind their contracts without penalty, stopping Qargo from enforcing noncompete agreements or provisions, and requiring Qargo to comply with the Franchise Rule. The Commission voted 5-0 to file the complaint and stipulated final order.