When consumers have problems with renewal prices, proper notice, and refund requests
Subscription models are popular, and it’s not uncommon for households have several subscriptions for products and services, media, software, and others. Studies on e-commerce models have noted that subscription-based options have increased 3.7 times faster than S&P 500 companies. As companies invest in subscriptions, the retention of subscribers becomes important; most can retain 70 to 80 percent of annual recurring revenue.
While subscription services can make life easier in many ways, there is an unfortunate trend of deceptive subscription practices that are causing people to be out-of-pocket because they weren’t aware of price increases or renewal terms.
Bryson Harris Suciu DeMay is actively pursuing claims from individuals for unfair subscription practices. Here are some ways in which consumers are experiencing negative impacts with subscription services.
Subscription Renewal Issues
Sometimes companies offer a new subscriber rate as a marketing tactic to attract new customers. The problem often arises, however, at renewal time. Some of the problems with renewals include:
Price increases. Many consumers are shocked when their subscription renews at a much higher rate than they had been paying.
Renewal timeframe. Subscriptions are for a pre-set period of time, and companies want to retain subscribers, so many offer an automatic renewal. Many customers have found that the renewal happened prior to the end of their term of service, eliminating the ability for them to cancel the subscription.
Deceptive Practices
Challenges with price increases and renewal terms may not be entirely on the consumer as companies often employ different methods to renew their subscriptions. One of these practices is called “negative option billing.”
Negative option billing is the practice of renewing the service automatically unless the customer opts out of the service prior to the subscription ending. In other words, if the consumer takes no action, the company views it as an automatic acceptance of the renewal.
The Consumer Financial Protection Bureau (CFPB) notes that these services “can cause serious harm to consumers” for three reasons:
- Sellers mislead consumers about terms and conditions
- Sellers fail to obtain consumers’ informed consent
- Sellers make it difficult to cancel
In these negative option practices, tactics often trick consumers into paying an unwanted subscription, often at a higher price, and then make it difficult for a consumer to get their money back.
Terms and Conditions
Companies often point to the agreed-upon terms and conditions as their foundation for the renewal when a consumer makes a complaint or inquires with customer service. However, while terms may indicate certain parameters to the subscription, the marketing practices a company has used can deliver a different message.
For example, certain terms of service can be disclosed after the renewal has occurred, or in hard-to-find text in the terms and conditions, or not disclosed at all on any of the website pages that a consumer would be going to in order to renew. Also, the renewal date could be changed to a different time than the end of the subscription time.
In terms of pricing, the company may not provide renewal reminders or adequate information in the renewal reminders, so the consumer can make an informed decision.
Finally, a practice of using “dark patterns” has been flagged by the Federal Trade Commission that may manipulate consumers into buying or sacrificing their privacy. These dark patterns can be found in how information is disclosed on a company’s website, how options for the consumer are pre-selected, or how consumers are steered towards a certain decision given how the website interface.
How Consumers Can Fight Back
Many consumers are impacted by these deceptive subscription practices and feel their only way to fight back is to go through what is often a challenging customer service process. However, what is happening to one consumer is likely happening to thousands, which leads to a possible legal remedy to put a halt to deceptive practices through a group action, commonly referred to as a class action.
Class actions occur when several individuals who have experienced similar harms join together for a collective action in a court of law. When individuals pool their collective losses, it can often force the company to address the financial issues of the situation and make changes to their actions that caused the issues in the first place. When companies are held accountable, consumers benefit.
There are laws in place to protect consumers from deceptive subscription practices. When those laws are not followed, recourse is available.
For more information on this and other legal issues, contact Bryson Harris Suici DeMay. We are a national plaintiff’s law firm addressing many consumer issues.