According to the UK’s Consumer Minister, Margot James, 40 million British adults subscribe to at least one product or service. From mobile phone contracts, to monthly goodie boxes, subscription services have become a ubiquitous part of life for many of us – and an incredibly profitable one for providers. Monthly subscriptions can be convenient, useful, and fair, but this isn’t always the case. An increasing number of consumers are falling into so-called “subscription traps”. The effects of these traps can be devastating.
What are Subscription Traps?
A subscription trap describes a situation in which a consumer is locked into a subscription contract against their will. This is usually because of misleading information – for example an apparently free trial which actually obliges you to pay for the good or service for a time when the trial is over. Citizens Advice has found that consumers reporting this kind of trap to them were paying an average of £160 over the course of three months for unwanted goods or services. Companies sometimes trap consumers by making it difficult or time-consuming to end their contract. One company reported to Citizens Advice required a whole six months’ notice for customers choosing to cancel their subscription. Another unhappy consumer told Citizens Advice that they attempted to cancel a subscription after being made redundant. The company in question demanded sensitive documents as evidence – including a p45 – before they would agree.
Being forced to pay through the nose for goods and services you don’t actually want can have a huge impact. The providers of subscription services sometimes require customers to sign up for CPAs – continuous payment authorities. This gives the company the legal right to change the amount, and timing, of a customer’s payments without giving them any prior notice. Worryingly, Citizens Advice found in a 2016 survey that only 21% of UK adults knew the difference between CPAs and Direct Debits. A further 84% of respondents in this survey admitted to agreeing to a subscription without realising it in the past.
All this can have a knock-on effect on people’s personal finances. Signing up to a “free trial” only to find yourself paying through the nose down the road can leave consumers short when it comes to paying important bills. With some contracts taking so long to cancel, you could be left short for months. In some cases, this kind of trap can force people to borrow money to cover their essential expenses, leading to problems with debt which can easily spiral out of hand. As fees and interest mount up over months, the situation can be extremely stressful and frustrating. Help is out there, though, and you can find out more about managing debt today. Clearly, these subscription traps can affect anyone, but there is plenty you can do to stay safe and avoid unexpected payments.
Tips for avoiding Subscription Traps
Philip Hammond’s autumn 2017 budget has promised to crack down on companies manipulating consumers into costly subscriptions with unclear terms. There is also plenty you can do as a consumer to keep yourself safe from this kind of subscription.
- If it sounds too good to be true, it probably is
This is the number one rule of thumb when it comes to avoiding poor purchases, and subscription purchases are no different. If an offer seems unreasonably good, be suspicious! Check the terms and conditions thoroughly, and if in doubt, avoid the subscription altogether.
- Read the Small Print
Some companies selling costly subscriptions which are difficult to cancel count on customers not noticing the small print for their profits. It can be tedious, but find the small print, and read it! If you are unsure about how the subscription works, it might be worth contacting the customer support team, or simply avoiding the service.
- Be cautious when providing Bank Details
Make sure you research the company first – online reviews can be a valuable resource for this. Also be sure to note whether your subscription will be paid by Direct Debit or CPA – the latter can be hugely expensive, as noted earlier, so ensure you are absolutely clear on the terms of the contract.
If you find yourself trapped
If you find yourself locked into an unwanted subscription, there are still steps you can take to resolve the issue.
- You can challenge unfair Terms and Conditions
If the company is based in the UK, you as a consumer have the power to challenge unfair contracts. Contact the company directly first to see if they can resolve your complaint – they may agree to reimburse you. If this is unsuccessful, you could consider contacting the firm’s trade body, or Citizens Advice.
- Follow the Cancellation Policy
If you wish to cancel a subscription, don’t wait. Look closely at the company’s cancellation policy and ensure you follow it to the letter. Some companies might try to trip you up by requiring you to cancel your subscription through a specific channel – make sure you do to stop making payments as soon as possible.