Why is it so hard to cancel subscriptions or end ‘free’ trials? Report shows how companies trap you into paying
- Written by Katharine Kemp, Associate Professor, Faculty of Law & Justice; Lead, UNSW Public Interest Law & Tech Initiative, UNSW Sydney
Many businesses are trapping Australian consumers in paid subscriptions by making them hard to cancel, hiding important details and offering “free” trials that auto-renew with hefty charges. We need law reform to tackle this continuing problem.
A new report shows 75% of Australian consumers have had negative experiences when trying to cancel a subscription, according to the Consumer Policy Research Centre (CPRC).
It shows businesses use “dark patterns”, which are designs that hinder consumers who try to act in their own best interests. Subscription traps are often called “Hotel California” techniques, referring to The Eagles’ famous lyric: “you can check out any time you want, but you can never leave”.
In some of these cases, consumers may have remedies under our existing consumer law, including for misleading conduct. But we need law reform to capture other unfair practices.
In the meantime, the CPRC’s research also gives examples of businesses with fair, consumer-friendly subscription practices. These also benefit the business.
Examples of unfair subscription traps
Subscription business models have become common – many products are now provided in the form of software, an app or access to a website. Some of these would once have been a physical book, newspaper, CD or exercise class.
Most people who use online services have experienced the frustration of finding a credit card charge for an unwanted, unused subscription or spending excessive time trying to cancel a subscription.
The shift businesses can make today.
CPRC, Let me out – Subscription trap practices in Australia, August 2024
Better practices benefit businesses too
The CPRC report also revealed that 90% of Australians would likely purchase from the same organisation if cancelling a subscription process was quick and simple.
Businesses focused on a short-sighted cash grab fail to realise that consumers might cancel but later return if treated well.
The CPRC highlights businesses that are doing a good job. For instance, the habit change app Atoms (based on James Clear’s book Atomic Habits) has a genuinely free trial. It doesn’t require credit card details, doesn’t auto-renew, and lets consumers know how many trial days remain.
The CPRC says the charity World Vision doesn’t auto-renew annual sponsorships, but reminds supporters about when the sponsorship will lapse.
Importantly, some businesses – such as Netflix – use their data for good in this context. They notice when users are paying for the service without using it and help them unsubscribe.
These practices should be applauded. But we need an unfair practices prohibition for businesses who don’t follow suit and recognise the long-term benefits of treating customers fairly.
Authors: Katharine Kemp, Associate Professor, Faculty of Law & Justice; Lead, UNSW Public Interest Law & Tech Initiative, UNSW Sydney
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