How a gap in consumer protections leaves Aussies open to subscription traps
At best, cancelling an online subscription can be annoying, but researchers have found that many cancellation processes have become downright deceptive.
Signing up for a digital subscription can take a matter of seconds.
But if you want to back out later, prepare to battle through several layers of marketing and manipulation.
A Consumer Policy Research Centre (CPRC) study found 75 per cent of Australians have had a negative experience when trying to cancel a subscription, with many finding cancellation processes “annoying” or “deceptive”.
These processes, also known as ‘dark patterns’, can cost consumers time and money; one in 10 Australians said they had given up trying to cancel a subscription, and continued to pay for unwanted services.
This may be unfair, but subscription traps are not illegal in Australia.
CPRC deputy CEO and digital policy director Chandni Gupta said that although dark patterns have been used for years, they are becoming more prevalent as more businesses offer digital subscriptions.
“If you’ve decided to join, but then you’ve decided I actually no longer want that, and then you’re trying to get yourself out and you can’t – that’s where the real harm is,” she said.
“It’s not a genuine choice.”
What are dark patterns?
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Companies that try to dissuade customers from cancelling subscriptions embed friction in the cancellation process through multiple screens and unnecessary steps.
These can range from making it difficult to figure out how to cancel a subscription, to attempting emotional manipulation with images or questions, to offering temporary discounts or free services.
CPRC found examples of dark patterns being used by organisations including Amazon, eBay, Kogan, HelloFresh and 28 by Sam Wood.
Even non-profits such as Headspace and UNICEF Australia were found to be guilty of laying subscription traps.
How do subscription traps affect consumers?
University of Tasmania retail expert Louise Grimmer said while it may seem like nothing to let a few dollars slip away to an unwanted subscription, the amount can quickly add up.
“Companies make it so easy for us to sign up to these products online or … via an app, that we often are not really very cognisant of how many subscriptions we actually have,” she said.
“Sometimes it’s so hard to cancel them that people just give up and think, ‘Oh, well, it’s only $9.95 a year. I suppose I can wear that. I haven’t got the time to try and work out what to do.’
“But if you’ve got a lot of those, then that can start to add up and given the current economic climate that we’re in, we’re all trying to save money wherever we can.”
Consumers are pressured into continued subscription payments, and the culprits are raking in money.
Annual global subscription economy revenue is estimated to be $895 billion; in 2028, annual revenue is projected to reach $1.5 trillion.
What consumer protections are available?
Internationally, various authorities from the European Union to India have already stepped in to reduce the mental load of subscription cancellations on consumers.
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Last week, the White House announced the Federal Trade Commission was finalising rules to make it easier for customers to cancel unwanted subscriptions and memberships by requiring companies to make cancelling as simple as signing up.
Later this year, the UK’s Digital Markets, Competition and Consumers Act will come into force, banning the use of dark patterns to sell products and services; managing subscriptions is specifically intended to be easier under the legislation.
Australia appears to be lagging.
Beyond a 2018 amendment to the National Credit Code that allowed easier online credit card cancellation options, the CPRC found Australian laws do not require fair subscription practices.
Organisations are not allowed to mislead or deceive customers, but consumer protections do not cover manipulative subscription traps.
The CPRC study recommended Australia introduce a law against unfair business practices, which would include an evolving ‘blacklist’ specific to unfair business practices such as subscription traps.
To ensure the law can keep up with current and future practices, the CPRC said the Australian Competition and Consumer Commission should have the power to add to the ‘blacklist’ of practices instead of these practices being enshrined in legislation.
Bank and business cooperation needed
Beyond government action, Gupta said banks and businesses should also work together to make cancelling subscriptions easier.
“It would be amazing to be able to cancel [subscriptions] straight from your bank account,” Gupta said.
“And this is where we really need to see different sectors working together to help customers get out of paying for things they no longer need or want.”
Making subscription cancellations easier could benefit businesses as well as consumers; the CPRC found 90 per cent of Australians would likely purchase from the same organisation if cancelling a subscription was quick and simple.
How can you protect yourself?
The first step is to protect yourself from subscription traps is working out how many subscriptions you already have, Grimmer said.
One way to do this is to go through your bank records to check monthly or annual fees you’ve paid.
Once you’ve worked out what subscriptions you have, how much they are costing you, and which ones you’d like to cancel, try your best to go through the respective cancellation processes.
Grimmer said you should also keep an eye on subscriptions that auto-renew, including the end of free trial periods; she suggested setting a reminder to cancel before the renewal date.
– TND
