Navigating the Maze of Online Subscription Traps

Have you ever signed up for a digital subscription, only to realise later on that you have been caught in a subscription trap? It can be a frustrating and costly experience, and one that many people fall victim to. In our increasingly digital world, it seems like everything we desire is just a click away. From streaming services and e-books to fitness apps and online courses, the convenience and variety of online subscriptions have become irresistible.

If you have been trapped, you are not alone. The Sydney Morning Herald reports Australians have $8 billion tied up in unused subscriptions and individually waste $1261 a year on services they are yet to cancel. Yikes!

What is a subscription trap?

A subscription trap occurs when a person signs up for a digital subscription and does not fully understand the terms and conditions of the agreement. This can include not realising that the subscription is for a full 12 months or not understanding the auto-renewal requirements. It can also happen when a person forgets to cancel their subscription before the renewal date, and they are charged for another year without their knowledge.

An example of a subscription trap is websites that offer a free trial period for you to try out the premium version of the product (also known as ‘Freemium’) allowing you to evaluate it before you sign up. This is a great idea! Try before you buy. However, be very careful of sites that want your credit card details at the start of the free trial. At the end of the free trial, an automatic charge is made on your card (either for the monthly or yearly subscription amount). And if you’ve chosen an option that is an annual plan you are now TRAPPED. If you try to cancel the plan it may cost you hundreds of dollars in cancellation fees so you will probably decide you may as well stick with it and give it a go. Then the renewal date comes and goes and guess what! Trapped again. There are also mobile apps that offer the same terms but the charges will go to your Apple ID or Google Play account.

Is it illegal?

Nope, but the Australian Competition and Consumer Commission (ACCC) has called for tougher laws to protect consumers from traps and confusing website designs. Last year the government passed legislation to outlaw unfair contract terms and these changes are relevant to the renewal clauses in subscriptions. HWL Ebsworth breaks these laws down really clearly, explaining that it must be very clear that there is an automatic renewal clause in the agreement (ie the terms and conditions) and there must be a sufficient notification for you to be able to cancel that renewal. As an example, I recently received an email from McAfee to say my anti-virus software subscription will renew in 60 days and to make sure my payment details are up to date. This gives me reasonable time to decide whether to cancel or let it renew.

Tips to Avoid Subscription Traps

Read the Fine Print

When you're considering signing up for any free trials or subscription services, it's important to take the time to carefully read the terms and conditions. Pay close attention to the details to avoid any unpleasant surprises, such as hidden charges, auto-renewals, and tricky cancellation policies. These things can quickly add up and cause unnecessary stress, so it's best to be informed and make sure you fully understand what you're getting into.

Set Reminders

It's important to keep track of important dates when it comes to free trials and subscription services. Mark your calendar and take note of when your trial period ends or when your subscription is set to renew. This will help you avoid any unexpected charges or fees help you make sure you have enough time to cancel your subscription or make any necessary changes before it automatically renews. This can save you money and prevent any unnecessary stress or frustration.

Use Virtual Credit Cards

Virtual credit cards allow you to set spending limits and expiration dates, providing an added layer of protection against automatic renewals and other unwanted charges. You can use these cards for one-time purchases or for ongoing subscription services and easily cancel them if you need to.

Review Your Bank Statements

Keep an eye on your bank statements to ensure there are no mysterious charges lurking in the depths. If you spot any unauthorised transactions, contact your bank immediately.

Opt for Prepaid Subscriptions

If you're wary of auto-renewals, prepaid subscriptions might be the way to go. By paying upfront, you won't have to worry about unexpected charges or cancellation hassles.

Trapped?

If you do find yourself caught in a subscription trap, contact the company and explain the situation. They may be willing to refund your money or cancel the subscription without penalty. Alternatively, they may offer you some sort of bonus to lessen the pain. However, if they are not willing to do so, you may need to seek legal advice to see if you have any options for recourse, or you might just be trapped and need to set yourself that reminder to cancel!