The news: The Federal Trade Commission’s “click-to-cancel” rule that would have simplified canceling subscriptions was rejected by a US federal appeals court on Tuesday, exposing a rift between the priorities of advertisers and digital service providers and those of consumers.

• The commission behind the initiative reportedly failed to follow procedures under the FTC Act when creating the rule, which requires a preliminary regulatory analysis for any rule with an annual impact on the US economy of about $100 million.
• The FTC argued that it did not need to follow a preliminary regulatory analysis as the decision’s economic impact would be under the $100 million threshold.
• The ruling would have prevented companies from forcing customers to go through barriers to cancellation and required businesses to receive consent before charging customers for memberships, programs with free trials, and auto-renewals.

Zooming out: The click-to-cancel decision will likely be seen as a win for many in the ad and entertainment industries.

• The NCTA-Internet and Television Association previously claimed the FTC was overstepping its authority with the rule. The NCTA claimed that there was no evidence of widespread deceptive practices and that oversimplifying cancellations could lead to accidental cancellations or fraud.
• The Association of National Advertisers agreed, stating that customers could accidentally cancel their accounts if the process was oversimplified.
• The Motion Picture Association and Entertainment Software Association claimed the rule was “unworkable in many respects.”

Yes, but: Consumers don’t seem to share the industry’s sentiment.

• 41% of consumers have reported difficulties finding cancellation options. Additionally, 32% had to contact customer service to cancel, while 29% felt pressured to stay subscribed, per a study from A Closer Look.
• Customers frequently spend more time canceling an account than they do creating it—for instance, an Amazon account can be created in 10 clicks but requires 56 to cancel.
• The FTC’s decision came after the agency received over 16,000 comments from consumers concerned about the difficulty of canceling unwanted subscriptions.

Our take: The ruling is seen as a win for companies that use subscriptions for first-party data to strengthen their ad ecosystem, giving protection for those looking to reduce churn and run more effective programmatic and retargeting campaigns.

But while advertisers may benefit from the decision, consumers still want an easier process—and simplifying cancellations can benefit businesses in several ways.

• Simplifying cancellation will boost customer satisfaction, leaving a better impression with customers and improving the chances of them returning in the future.
• Promoting a simple cancellation gives consumers more confidence that if they don’t like a service, they won’t be forced to continue paying.