The National Federation of Independent Business (NFIB) has filed a legal challenge against a recent rule from the Federal Trade Commission (FTC) that affects businesses with automatic renewal subscriptions or memberships.
The lawsuit, filed in the United States Court of Appeals for the Sixth Circuit, seeks to overturn the FTC’s rule. NFIB is pursuing this case in partnership with the Michigan Press Association.
Beth Milito, Executive Director of NFIB’s Small Business Legal Center, criticized the rule’s impact on small businesses, saying, “At a time when small businesses are struggling from record overregulation, this rule exacerbates those challenges by imposing more regulatory costs and paperwork burdens. Unlike large companies that have teams of lawyers and compliance consultants, most small businesses handle their recordkeeping on their own. This rule will require more time and resources most small businesses can’t afford. It is a clear example of administrative overreach.”
NFIB argues that the FTC’s final rule imposes burdensome regulatory requirements on consumer contracts for businesses across all industries.
The rule mandates specific disclosures, defines how these disclosures should be communicated, and restricts what company representatives may say to consumers.
NFIB’s petition contends that the FTC’s rule violates the Administrative Procedure Act, lacks substantial supporting evidence, and exceeds the FTC’s regulatory authority. NFIB is urging the court to declare the rule unlawful and vacate it.
