IAB CHALLENGES FTC'S NEW SUBSCRIPTION RULES IN FEDERAL LAWSUIT

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Interactive Advertising Bureau (IAB)

Oct 29, 2024, 08:30 ET

WASHINGTON, Oct. 29, 2024 /PRNewswire/ -- The Interactive Advertising Bureau (IAB), along with a coalition of leading trade associations, filed a lawsuit today against the Federal Trade Commission (FTC) challenging its changes to rules governing subscription renewals. The suit asserts that the FTC failed to adhere to proper procedures, including conducting a comprehensive economic analysis.

In April, following IAB's request for public hearings, an administrative law judge determined that the FTC's proposed "Negative Options Rule" would impose a compliance burden exceeding $100 million—a legal threshold that requires the agency to perform a more thorough review. Negative option marketing involves practices where consumers are able to continue to receive subscription services unless they cancel the service.

"In multiple filings, we've simply asked the FTC to follow the law and Constitution when issuing major regulations," said Lartease Tiffith, IAB's Executive Vice President for Public Policy. "Instead, the FTC has introduced overly broad rules, bypassing public input and congressional mandates. While IAB supports reasonable regulation, these new rules threaten a business model essential to companies of all sizes across various industries—and to consumers."

Tiffith also highlighted the potential financial impact for people currently enjoying audio, video, news, shopping, and other subscriptions. "The economic burden could far exceed $100 million. The FTC's rules could eliminate free trials and straightforward renewals, replacing them with cumbersome forms and legal jargon–ultimately costing consumers both time and money. Furthermore, vague language and excessive penalties will discourage businesses across industries from offering subscription services altogether," he said.

He explained advancements in digital advertising, marketing, and online payment services have allowed small businesses to compete, offering more choice and lower transaction costs to consumers. Studies show online subscriptions and shopping are especially popular with younger Americans. He said the FTC should focus its resources on punishing bad actors.

IAB is joined in the lawsuit by the Electronic Security Association (ESA) and the National Cable Television Association (NCTA).

About IAB
The Interactive Advertising Bureau empowers the media and marketing industries to thrive in the digital economy. Its membership comprises more than 700 leading media companies, brands, agencies, and the technology firms responsible for selling, delivering, and optimizing digital ad marketing campaigns. The trade group fields critical research on interactive advertising, while also educating brands, agencies, and the wider business community on the importance of digital marketing. In affiliation with the IAB Tech Lab, IAB develops technical standards and solutions. IAB is committed to professional development and elevating the knowledge, skills, expertise, and diversity of the workforce across the industry. Through the work of its public policy office in Washington, D.C., the trade association advocates for its members and promotes the value of the interactive advertising industry to legislators and policymakers. Founded in 1996, IAB is headquartered in New York City.

SOURCE Interactive Advertising Bureau (IAB)