WASHINGTON, D.C.: A federal rule designed to make it easier for Americans to cancel subscriptions has been blocked by a U.S. appeals court, dealing a setback to consumer protection efforts just days before the rule was set to take effect.

The "click-to-cancel" rule, introduced by the Federal Trade Commission, would have required businesses to let customers end subscriptions as easily as they started them. It also mandated clear disclosures about free trials and automatic renewals, and required companies to obtain explicit consent before charging consumers.

Originally adopted in October, the rule was part of the Biden administration's broader "Time is Money" initiative to reduce everyday hassles for consumers.

However, the U.S. Court of Appeals for the Eighth Circuit ruled this week that the FTC failed to follow proper procedure. Specifically, the commission did not produce a preliminary regulatory analysis, which is required for any rule expected to have an annual economic impact of over US$100 million.

The FTC argued it believed the rule's impact would fall below that threshold. However, an administrative law judge disagreed, determining that the financial effect would exceed $100 million. The court sided with the judge, stating:

"While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission's rulemaking process are fatal here."

As a result, the court vacated the rule.

The FTC declined to comment.

Meanwhile, the agency is continuing preparations for a separate legal battle against Amazon, which it has accused of enrolling consumers in its Prime program without consent and making cancellation difficult. That trial is expected to begin next year.