As more businesses are turning to paid subscription models, there's been growing frustration about the tactics used to prevent people from cancelling.
A recent report by the Consumer Policy Research Centre (CPRC) found 75 per cent of Australians have had a negative experience when trying to cancel a subscription, and 32 per cent felt pressured into keeping a subscription they wanted to cancel.
The US Federal Trade Commission recently introduced a "click to cancel" rule which will require sellers to make cancelling subscriptions as easy as signing up.
Meanwhile, the Australian government has announced that it will take action against a range of unfair trading practices, including subscription services that are difficult to cancel.
However, any reform proposals are not expected be finalised until at least the first half of 2025.
The tricky tactics used to keep you from cancelling
Business and organisations use a range of tactics to avoid losing subscribers.
The CPRC's report highlights some common tactics of so-called "subscription traps" — services with recurring charges that are difficult to cancel:
- You might not be able to cancel the service the same way you subscribed — for example, you might need to cancel with a phone call even if you signed up to a service using a mobile app;
- You may be offered discounts or other incentives to keep your subscription, or given the option to "pause" your subscription instead of cancelling;
- The company may use emotional manipulation tactics during the cancellation process;
- There may be hidden costs and fees when you try to cancel;
- Even if you manage to unsubscribe, you might be continually pressured with emails and notifications to sign up again.
Paul Harrison, a professor of marketing and consumer behaviour at Deakin University, says many businesses leverage consumer behaviour and psychology in their sign-up and cancellation processes.
"It's very easy to get a subscription and sign up and commit to all sorts of expenses, and it's very difficult to stop that subscription," he says.
How consumer law applies to subscription services
In Australia, consumers have some protections against "subscription traps" under the Australian consumer law.
The Australian Competition and Consumer Commission (ACCC) says subscriptions that include false or misleading representations in the sign-up or cancellation stage may breach the law.
The consumer law also includes protections against unfair contract terms. In determining whether a contract is unfair, the ACCC says considerations include:
- Whether the term causes a significant imbalance between a consumer's rights and obligations and those of the business;
- Whether the term is reasonably necessary to protect the legitimate interests of the business; and
- Whether the term would cause the consumer detriment (financial or non-financial) if the business tried to enforce it.
The gaps in current consumer law for 'subscription traps'
One challenge is that some tactics used by subscription services fall into legal grey areas.
Katharine Kemp, associate professor at UNSW Sydney's faculty of law, has pointed out that some "subscription traps" might not meet the test for misleading conduct or unfair contract terms yet may be difficult to cancel in practice.
For example, a business may provide an option to cancel subscriptions by phone, but not have enough staff at the call centre to answer calls.
It's a challenge that the ACCC has acknowledged.
"Some aspects of subscription service providers making it difficult for consumers to cancel their subscriptions may not be covered by existing laws," an ACCC spokesperson said in a statement to the ABC.
Government looking to make cancelling subscriptions easier
Last week, the Australian government said it would seek to legislate a "general prohibition on unfair trading practices", with "specific prohibitions on a range of dodgy practices" including subscription traps.
"We need to make sure, when it comes to subscriptions, it can't be incredibly easy to sign up to a subscription and incredibly difficult to get out of it," Treasurer Jim Chalmers said at a press conference after the announcement.
"We get a lot of feedback about that. We want to work with the ACCC to crack down on that."
The government has released a consultation paper and says it will work with states and territories to finalise a reform proposal in the first half of 2025.
The ACCC welcomed the announcement and says it will help "better address problematic 'subscription-trap'-like conduct" under the Australian consumer law.
"More generally, we think this reform will better protect consumers as it will set an improved standard for business behaviour and promote better conduct in the market," a spokesperson said.
It can be hard for consumers to resolve complaints about subscriptions
Another challenge for consumers is where to take complaints about dodgy subscription practices.
While the ACCC can investigate and take enforcement action against companies in breach of consumer law, it is not a complaints handling body. Instead, the ACCC directs consumers to state and territory consumer protection agencies.
Even then, consumers may need to pursue legal action — such as through a tribunal or small claims court — to have their complaint addressed.
It's a situation that Professor Harrison says is a "real problem".
"It's often just advice you get from your local consumer affairs or fair trading [body]," he says.
"If governments are serious about protecting consumers … they need to put in independent mediators who can make rulings. It's not going to [a tribunal] or petty court, it has to be easy."
