The controversial rule, which would’ve forced gyms to make it easier for people to cancel their memberships, will no longer go into effect
A United States appeals court has struck down the Federal Trade Commission (FTC)’s “click-to-cancel” rule, a decision America’s top fitness industry organization hailed as “a major victory.”
The controversial rule, officially known as the “negative option rule,” was set to go into effect on July 14th. It would have required that many businesses, including gyms, make it as easy for consumers to cancel subscriptions and memberships as it was to sign up for them in the first place.
While click-to-cancel has been praised by consumer-rights groups, fitness industry stakeholders expressed concerns that the rule would have exposed gyms, health clubs and fitness studios to unnecessary and costly operational burdens.
On Tuesday, the United States Court of Appeals for the Eighth Circuit issued an opinion vacating the rule, saying it suffered from “procedural deficiencies.”
The Health & Fitness Association (HFA) called the decision “ a major victory for the fitness industry and a direct result of HFA’s sustained advocacy.”
“HFA has been deeply involved in this issue for more than two years, starting with formal comments on the original proposal and continuing through every phase of the process,” the organization wrote Tuesday in a note to members. We filed an amicus brief in the case to highlight the rule’s burdens on health and fitness facility operations, while also leading a Capitol Hill strategy to prepare a Congressional Review Act resolution in partnership with the US Chamber and industry allies.”
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While the Eighth Circuit Court’s decision will come as a sigh of relief to fitness businesses across the country, some states are taking matters into their own hands in an effort to make gym memberships easier to cancel.
In May, New York Attorney General Letitia James announced a $600,000 settlement with Equinox Group, which operates Equinox, Equinox+ and SoulCycle, over alleged unfair membership cancellation practices. According to the attorney general’s office, the luxury fitness and lifestyle company didn’t offer accessible online cancellation options, among other violations.
“New Yorkers should be able to cancel a membership they no longer use or want without breaking a sweat,” Attorney General James said in a statement following the settlement.