The curse of the sneaky subscription
Why the sneaky subscription is bad for the consumer and bad for business
Many people have a subscription to services such as TV streaming, computer programmes, mobile phone apps and food, drink and beauty products delivered to the home. For the most part things work fine. The consumer gets what they need without the hassle of a break in service while the business gets a steady revenue stream.
But when the subscription is unwanted, the impact is felt by the unsuspecting consumer and, we argue, by the business too.
While most people are happy with their subscription others are very unhappy. There are two reasons for their unhappiness. The first is when it isn't clear that a free trial automatically converts into a paid subscription. The second is when a subscription automatically renews without people realising it or knowing how to cancel. It is these 'sneaky' subscriptions that are the real problem.
And it's a big problem. It is estimated that about one in four people have unwanted subscriptions. The Citizens Advice Bureau calculate that about half a billion pounds is wasted on these.
So why do businesses do it? The simple answer is that it's all about getting money in the bank. Last year, Business Insider ran a story suggesting that Amazon had known since 2017 that its user-interface misleads people into signing up for Prime. In response, a number of different fixes were trialled but all resulted in lower subscriptions and so were 'canned'.
With auto renewal, businesses calculate that the odds are stacked in their favour - there is more chance of someone not cancelling an auto renewing subscription than there is of getting someone to positively opt-in to the subscription.
And while this model means money in the bank, sneaky subscriptions could be storing up more trouble than they are worth. Research shows that 60% of people making online purchases read the contents of reviews on sites such as Trustpilot, Amazon, Google Play and Apple Store before buying. Have a read of user reviews on these sites and you will quickly see lots of examples of reviewers lambasting the company because they have been the victim of a sneaky subscription.
But it's not just the consumer who suffers. A pile of reviews that highlight sneaky subscription practices will negatively affect a business's overall rating and ultimately hit them where it hurts the most : the bottom line.
We do a lot of work analysing the content of Trustpilot reviews to guide clients on what people really think of their products and services. Two recent examples show how sneaky subscription can negatively impact user ratings. A business providing resources to trace family trees has a free trial period that auto converts into a paid subscription after a short time. A lot of people say that they were caught out by this because it wasn't clear when they signed up to the site. As a result, and despite users rating highly its service, it received a positive sentiment score for its cost of only 22% (the percentage of mentions about costs that were positive rather than negative) and a quarter of reviews were one star.
This example shows that an acclaimed service can suffer because of a sneaky subscription. When a sneaky subscription coincides with a poor service then the impact can be much worse. In the second example, a dating site's sneaky subscription was a contributory factor to 70% of its reviews being 1 star and one of the lowest positive sentiment with costs scores we've seen. Other factors contributing to the poor reviews include too many dormant profiles and unexpected fees when cancelling membership.
With so many people now consulting review sites before making purchase decisions, businesses have to be transparent about subscriptions and how to cancel an auto renewal. The Competitions and Markets Authority (the UK consumer protection regulator) has issued guidance to say that businesses should give consumers clear and prominent information about the subscription period, how much they will be charged, the length of the renewed contract period and how auto renewal works. The CMA suggests that a renewal reminder is sent out in good time. This is just guidance and so is not legally enforceable but it should be the minimum requirement.
A sneaky subscription might see the bank account grow but the damage it causes to a business's reputation isn't worth it in the long term.
Our view is that it isn't just the consumer who pays but ultimately the business too.
