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New FTC 'Click-to-Cancel' Rule Marks Latest Pro-Consumer Win by Lina Khan
"Consumers shouldn't have to navigate a Rube Goldberg machine to get out of a subscription they purchased with a keystroke," said one advocate.
Oct 16, 2024
The target of the latest consumer protection rule unveiled by the Biden-Harris administration's Federal Trade Commission on Wednesday is, as one journalist said, "one of those things that sounds minor but is at the heart of many of the frustrations of American life": The hoops people in the U.S. are required to jump through to cancel subscriptions or services they no longer want or need.
The FTC announced that its "click-to-cancel" rule, part of the agency's review of the 1973 Negative Option Rule, was finalized and will go into effect 180 days after it is published in the Federal Register.
Under the rule, sellers will be required to "make it as easy for consumers to cancel their enrollment as it was to sign up," said the FTC.
Negative option marketing, which allows sellers to interpret a customer's failure to take a specific action as an acceptance of an offer, "can be convenient for sellers and consumers," said the FTC. But the number of complaints the commission has received about subscriptions that are difficult to cancel "has been steadily increasing over the past five years and in 2024 the commission received nearly 70 consumer complaints per day on average, up from 42 per day in 2021."
FTC Chair Lina Khan, who has been applauded by progressives for taking on corporate greed and monopolies, said the FTC aims to end "tricks and traps, saving Americans time and money."
"Too often, businesses make people jump through endless hoops just to cancel a subscription," said Khan. "Nobody should be stuck paying for a service they no longer want."
Advocacy group Demand Progress said the click-to-cancel rule is an example of the kind of action that has made Khan a target of billionaire donors who have lobbied for the chair to be replaced by Vice President Kamala Harris if she wins the November election—and of why voters should push for Khan to remain at the helm of the FTC.
"When Big Tech and Big Business billionaires attack Lina Khan and the FTC, they are attacking commonsense consumer protections like the 'click to cancel' rule," said Emily Peterson-Cassin, director of corporate power at the Demand Progress Education Fund. "On one side, you have Lina Khan and the FTC taking action to stop companies from harassing and confusing consumers into paying for subscriptions they don't want. On the other side, you have billionaire CEOs trying to stop the FTC's work to empower consumers."
Thanks to Khan, said Lindsay Owens, executive director of the Groundwork Collaborative, the rule "will put a stop to [corporations'] predatory pricing model, saving consumers time and money."
"Companies are no longer content to overcharge you just once. Now they are deploying deceptive subscription models to overcharge you as many times as they can for as long as they can," said Owens. "Consumers shouldn't have to navigate a Rube Goldberg machine to get out of a subscription they purchased with a keystroke."
David Dayen, executive editor of The American Prospect, noted that Republican FTC Commissioner Melissa Holyoak claimed the rule was taking effect too quickly—even though it was first proposed 19 months ago.
"Incredible that this was a 3-2 vote," said Dayen. "Republicans on the FTC think it should be hard to cancel subscriptions."
A poll by Data for Progress in August found that 83% of voters support the click-to-cancel rule.
"Corporations were taking our money, we didn't want them to, and we couldn't stop them," said Helaine Olen, managing editor at the American Economic Liberties Project. "Now we can."
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Fed 'Waited Too Long' But Finally Cut Interest Rates
"The Fed must continue to cut rates aggressively in the coming months to prevent a slowing labor market and provide much-needed relief to people who are bearing the brunt of high interest rates," said one economist.
Sep 18, 2024
Economists and working-class people across the United States on Wednesday welcomed the Federal Reserve's decision to cut its benchmark interest rate by half a percentage point as an incredibly overdue and necessary move.
In line with signals from Fed Chair Jerome Powell's speech last month, the Federal Open Market Committee lowered the federal funds rate by half a percentage point to 4.74-5%, the first cut "since March 2020 when Covid-19 was hammering the economy," as The Associated Pressnoted. Additional cuts are expected over the next two years.
"Finally," wrote Kenny Stancil, a senior researcher at the Revolving Door Project and former Common Dreams staff writer, in a blog post. "The Fed should have provided interest rate relief months ago. While this overdue move is welcome, we must reiterate that Powell's deferral of interest rate cuts has hurt the clean energy transition and inflicted other economic harms."
Lawmakers and experts, including Groundwork Collaborative chief economist Rakeen Mabud, have long called for rate cuts and highlighted the harms of refusing to pursue them.
"Today's rate cut is a step in the right direction, but only a first step," said Mabud in a statement Wednesday. "The Fed must continue to cut rates aggressively in the coming months to prevent a slowing labor market and provide much-needed relief to people who are bearing the brunt of high interest rates."
Center for Economic and Policy Research senior economist Dean Baker also welcomed that the Fed is changing course, saying: "This is a belated recognition that the battle against inflation has been won. Contrary to the predictions of almost all economists, including those at the Fed, this victory was won without a major uptick in unemployment."
"Unfortunately, the Fed waited too long to make this turn," Baker continued. "As a result, the unemployment rate has drifted higher. While there is little basis for concerns about a recession, if the unemployment rate is 0.5 percentage points higher than it needs to be, that translates into 800,000 people out of work who want jobs."
"It is good that the Fed has now recognized the weakening of the labor market and responded with an aggressive cut," he added. "Given there is almost no risk of rekindling inflation, the greater boost to the labor market is largely costless. Also, it will help to spur the housing market where millions of people have put off selling homes because of high mortgage rates."
Liz Zelnick of Accountable.US similarly stressed the benefits, saying that "while it should have come sooner, the Fed's interest rate cut will ease some burden for many Americans that found it simply too expensive to buy new homes or cars."
"Fortunately, the Fed's aggressive interest rate strategy defied odds and did not spur a recession as the economy continues to grow hundreds of thousands of jobs every month while wages are rising," she said. "Persistently high interest rates were never going to get at the root of the corporate price gouging epidemic that has needlessly kept prices high on many necessities—a problem that is on Congress to fix."
Some members of Congress who have been pushing for rate cuts also applauded the belated action—including Sen. Martin Heinrich (D-N.M.), chair of the Joint Economic Committee.
"Let's be clear: Today's decision is a big win for families across the country," he declared. "Lower rates mean that more families will be able to buy a home or a car without high interest payments looming over them, and their credit card bills will go down."
"But there is still work to be done," he said. "I will continue to work with my colleagues to fight for policies that raise wages, strengthen our economy, create new jobs, and lower prices for families in New Mexico and across the country."
Congressman Brendan Boyle (D-Pa.), ranking member of the House Budget Committee, has also criticized the central bank's refusal to cut rates and praised the Wednesday reversal.
"We've made significant progress on inflation, but House Democrats know there is more to be done to bring down the cost of everyday goods and take on corporate price gouging," Boyle said, nodding to the November election in which former Republican President Donald Trump is facing Democratic Vice President Kamala Harris.
"While House Republicans continue trying to inflict higher costs and higher taxes on the middle class with Trump's Project 2025 agenda," he added, "House Democrats will never stop fighting to deliver an economy that works for working families."
Harris similarly applauded the "welcome news for Americans who have borne the brunt of high prices" while acknowledging that more must be done and vowing that "my focus is on the work ahead to keep bringing prices down."
"I know prices are still too high for many middle-class and working families, and my top priority as president will be to lower the costs of everyday needs like healthcare, housing, and groceries. That is why I am proposing plans to cut taxes for more than 100 million working and middle-class Americans, pass the first-ever federal ban on corporate price gouging on food and groceries, and make housing more affordable by building 3 million new homes and giving more Americans down payment assistance," she said.
The Democrat also took aim at Trump's intentions, warning that "while proposing more tax cuts for billionaires and big corporations, his plan would increase costs on families by nearly $4,000 a year by slapping a Trump Tax on goods families rely on, like gas, food, and clothing. He wants to repeal the law I cast the tie-breaking vote to pass that caps the costs of prescription drugs for seniors, including insulin at $35. He would end the Affordable Care Act and erase the progress we have made to lower premiums for millions of Americans by hundreds of dollars a year."
"Sixteen Nobel Prize-winning economists say his plan would increase inflation, and a Moody's report found it would cause a recession by the middle of next year," she noted. "This election is about whether we are going to finally build an opportunity economy that gives every American a shot not just to get by, but to get ahead. As president, that will be my priority every day."
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During Antitrust Trial, Exec Admits Kroger Jacked Up Milk and Egg Prices Above Inflation
"The thing is, execs all over the economy were saying this stuff on their earning calls back in 2021," said one progressive economist. "This was not a secret."
Aug 28, 2024
A top Kroger executive admitted under questioning from a Federal Trade Commission attorney on Tuesday that the grocery chain raised its egg and milk prices above the rate of inflation, a concession that came as no surprise to economists who have been highlighting corporate price gouging across the U.S. economy in recent years.
Andy Groff, Kroger's senior director for pricing, said during a court hearing on the FTC's legal challenge to the company's proposed acquisition of Albertsons—its primary competitor—that Kroger's objective is to "pass through our inflation to consumers."
Groff's comment came in response to questioning about an internal email he sent to other Kroger executives in March. In that note, Groff observed that "on milk and eggs, retail inflation has been significantly higher than cost inflation."
A Kroger spokesperson told Bloomberg in a statement that the email was "cherry-picked" and "does not reflect Kroger's decadeslong business model to lower prices for customers by reducing its margins."
But Rakeen Mabud, chief economist at the Groundwork Collaborative, noted Wednesday that "execs all over the economy were saying this stuff on their earning calls back in 2021."
"This was not a secret," Mabud added.
Bloombergreported Tuesday that "in Illinois, where Kroger operates the Mariano's chain, company executives create a weekly report on egg prices, comparing prices from Walmart, Meijer Inc., and Albertsons' Jewel-Osco, said Matthew Marx, president of the Kroger division overseeing Mariano's."
"The FTC walked Marx through several of the weekly egg reports from 2022 and 2023," the outlet added. "In May 2022, for example, both Walmart and Meijer dropped egg prices by 14 cents a dozen, but Mariano's opted to keep its pricing the same to match the higher price at Jewel-Osco, Marx said. A year later, in April 2023, as egg prices again soared, Mariano's opted to keep its pricing near Jewel-Osco's even as Walmart was lowering its own."
The U.S. grocery sector—dominated by Kroger, Walmart, and a handful of other major companies—profited hugely during the Covid-19 pandemic as corporate giants exploited supply chain disruptions to aggressively jack up prices.
"The grocery industry, as represented by four of its largest players, became more profitable in the pandemic, and it has stayed that way for a couple of years at least," The Financial Timesnoted Monday. "It is a good guess that price increases in excess of cost increases have played a role in this."
In its legal challenge against Kroger's proposed merger with Albertsons, the FTC argues that the deal would further drive up costs for consumers by eliminating "fierce competition" between the two grocers.
Laurel Kilgour, research manager at the American Economic Liberties Project, said after opening arguments in the case earlier this week that the FTC "previewed concrete evidence that a Kroger-Albertsons merger would lead to higher prices for millions of Americans and worse working conditions for hundreds of thousands of workers."
"By contrast, lawyers for Kroger and Albertsons touted fake promises of utopian outcomes that are not legally enforceable. Indeed, Albertsons has a track record of profiting from similar fake promises that turned out disastrously for competition and for communities, and this time is no different," Kilgour continued. "At a time when working families are especially concerned with costs and access to food, we need more—not less—competition between grocery stores on prices, wages, the freshness of produce, and service quality."
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