A federal appeals court has blocked the Federal Trade Commission’s (FTC) “click-to-cancel” rule, a consumer protection regulation that would have made it easier for Americans to cancel online subscriptions.

The U.S. Court of Appeals for the Eighth Circuit vacated the rule Tuesday, just days before it was set to take effect on July 14, citing procedural failures during the rulemaking process.

The court concluded that the FTC had not met mandatory requirements under the Federal Trade Commission Act, particularly a provision requiring a preliminary regulatory analysis when a proposed rule is expected to have a nationwide economic impact exceeding $100 million.

Although the FTC initially claimed the rule would fall below that threshold, its revised estimates did not trigger a new analysis until the final rule stage, an omission the court deemed a “fatal” procedural error.

“Excusing the Commission’s noncompliance with [this requirement] could open the door to future manipulation of the rulemaking process,” the panel wrote in its unanimous opinion. While acknowledging concerns over deceptive business practices in subscription services, the court emphasized that “the procedural deficiencies of the Commission’s rulemaking process are fatal here.”

The rule, first proposed in March 2023 and finalized in October under FTC Chair Lina Khan, sought to modernize the 1970s-era Negative Option Rule. It would have applied broadly to any subscription or recurring billing plan that presumes consent through inaction—so-called “negative option” offers.

The update would have required companies to make canceling a subscription as simple as signing up and to present consumers with all relevant terms before enrollment. Noncompliance could have led to civil penalties.

The regulation was widely supported by consumer advocacy groups and government agencies. The FTC reportedly received more than 16,000 public comments and had documented receiving an average of 70 consumer complaints per day about difficulties in canceling unwanted services.

However, business groups and industry associations, including the U.S. Chamber of Commerce and the National Federation of Independent Business, strongly opposed the rule. They argued it exceeded the FTC’s statutory authority and imposed burdensome compliance costs. Legal challenges were filed in multiple jurisdictions before being consolidated for review by the Eighth Circuit.

Industry attorney Corey D. Silverstein previously warned that, while the rule aimed to enhance transparency and consumer rights, its enforcement could pose “major headaches” for website operators who need to overhaul their subscription and cancellation processes.

Although the court’s decision halts the FTC’s rule, many businesses, particularly those processing payments through Visa and Mastercard, already comply with similar cancellation and disclosure standards. Additional federal and state laws, such as California’s Automatic Renewal Law and the Restore Online Shoppers’ Confidence Act of 2010, continue to govern online subscription practices and have been enforced against both adult businesses and mainstream retailers.

Dotan Hammer, a partner at Pearl Cohen law firm, said the FTC would now have to “go back and repeat most of the rulemaking process” to reintroduce the rule lawfully. “It’s hard to imagine that it can be completed in any less than 4–6 months,” he added, suggesting the rule’s reissuance and enforcement may not occur before 2026.

The FTC declined to comment on the ruling.