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February 20, 2024 Update on FTC Negative Option Rule Rulemaking

Posted by Marc Roth | Feb 20, 2024 | 0 Comments

Pretty Much Everyone:  Any clue as to when the new FTC Negative Option rule will go into effect?  Did the recent Informal Hearings on the rulemaking process impact such timing, and what the heck were they about and how'd they go?

Cobalt's Answer(ish):  Timing unclear, and somewhat of a sh!tsh0w.  Briefly, the timing of the new Rule is unclear given (1) the recent Informal Hearings addressing the FTC's process in conducting the rulemaking (i.e., did the FTC's April 24, 2023 Notice of Proposed Rulemaking (NPR) contain any “disputed issues of material fact” (largely, but not exclusively, challenging the FTC's compliance cost estimates), and (2) whether the staff/commission has already reviewed, considered, and decided on the substantive aspects of the new rule following the public comment period.

But Judge Foelak, the ALJ overseeing the Hearings, left some breadcrumbs.  She said at the conclusion of the last hearing on February 14 that the hearing process was officially closed, but would allow post hearing rebuttal briefs to be submitted until February 22 (this Wednesday).  She said she would issue a decision no later than 60 days from the close of the process, which, on the outside, is April 14ish.

Possible outcomes:

  • If Judge Foelak quickly concludes the NPR contained no “disputed issues of material fact” (i.e., industry commenters didn't sway her), the FTC, if the final rule is ready, can announce it for publication in the Federal Register as early as next week, which might take a few weeks for actual publication, and in such case it would go into effect as early as mid Q2, unless challenged in court by industry objectors.
  • If she finds there are disputed issues of material fact, she could require the FTC to revisit such matters, which will likely delay publication.

Given the upcoming federal election later this year and possibility of an administration change, the FTC will, like it is doing with everything else nowadays, aggressively push this through as quickly as possible, and let the chips fall where they may.

For details on the hearings, which fell somewhere between the most cringey Curb Your Enthusiasm episode and the Game of Thrones' Battle of the Bastards (too graphic to link to), DM us!


About the Author

Marc Roth

Marc advises clients on all things advertising, marketing, promotions and privacy, having practiced in these areas for decades, in various capacities. A former Federal Trade Commission attorney, he understands regulatory priorities and concerns, which enables him to provide informed and practical advice to clients and prepare for the possibility of challenge. Having served as Chief Marketing Counsel for a Time Warner subsidiary, he knows the type of advice his clients need to do their job – prompt and practical answers, not lengthy and indecisive memos. He knows that “no” is not an option for in-house lawyers serving their business teams and works tirelessly with clients to develop viable and effective solutions acceptable to all stakeholders.


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