ESA applauds court decision vacating FTC’s Negative Option Rule

DALLAS—The Electronic Security Association (ESA) is applauding a major decision by the Eighth Circuit Court of Appeals, which struck down the Federal Trade Commission’s Negative Option Rule allowing consumers to cancel subscriptions more easily.

The court found that the FTC failed to follow the required procedures, including conducting a proper economic impact analysis.

ESA, alongside the U.S. Chamber of Commerce and other petitioners, challenged the rule last fall, warning it posed serious risks to the electronic security and life safety industry. The rule would have applied broad cancellation requirements across all industries, ignoring the essential and continuous nature of security services.

The association stated that “Security systems are not optional or occasional. They protect people and property every day. An accidental cancellation caused by a missed notice or technical issue could have left families, businesses, and communities exposed.”

“This ruling is a major win for our industry and the millions of people we protect every day,” said Taylor Criddle, vice president of advocacy and public affairs for ESA. “The FTC’s rule would have imposed a one-size-fits-all mandate that simply doesn’t work for security and life safety services. We’re proud to have stood up for our members and ensured that critical protections remain uninterrupted.” 

ESA’s legal challenge was part of a larger coalition effort involving several industry groups. In October, ESA filed a petition for review with the United States Court of Appeals for the Fifth Circuit to block the FTC’s newly adopted click-to-cancel rule.

The petition, which ESA filed jointly with the NCTA – The Internet & Television Association and the Interactive Advertising Bureau, sought an order vacating the FTC’s Negative Option Rule, which was announced on Oct. 16, 2024, and required sellers to offer subscribers “a way to cancel that’s as quick and easy as it was to sign up,” as stated in a fact sheet provided by the FTC.

The case was consolidated in the Eighth Circuit after a judicial panel randomly selected the venue. The panel emphasized the FTC’s failure to conduct the required preliminary analysis, noting the rule’s potential to impact the national economy by more than $100 million annually.

“This was about protecting the integrity of our industry and the people who rely on us every day. We knew the risks this rule posed, and we fought hard to make sure our voice was heard,” noted Melissa Brinkman, ESA board member and CEO of Custom Alarm. “This outcome is a direct result of standing together and refusing to accept a regulation that would have jeopardized public safety.”

With the rule now vacated, ESA members can continue delivering uninterrupted protection to the public without facing regulatory burdens that do not reflect the realities of their work.

“The ruling sends a strong message to federal agencies - industries responsible for security and life safety must be consulted and considered when new rules are proposed,” ESA said.

ESA remains committed to advocating for smart, practical policies that keep people safe and allow our members to do their jobs effectively, the association said following the ruling.