The US mandates all memberships and subscriptions must offer ‘click to cancel’: now do Australia and Foxtel.

Key points:

• The US is poised to put an end to subscription traps.
• This includes games such as switching free trials to paid subscriptions without notice.
• Australia should do the same.
  ‍

Subscriptions have a bad name, and who amongst us has not periodically done a subscription purge - discovering unknown Apple subscriptions - can cast the first stone.

Conclusion: These US laws, likely to come into effect in early 2025, are great consumer protections. The broader world of digital subscriptions will benefit overall: Foxtel subscribers overwhelmingly!
‍

What it is

The American Federal Trade Commission (FTC) announced that it had finalised a proposal for ‘click to cancel’ rules, which would mandate that US businesses make it as easy to cancel a membership, service, or subscription as it was to subscribe.

If you subscribed online, you must be able to cancel online.

If you subscribed in person or over the phone, you can cancel over the phone without pushback or games

‘Click to cancel’ isn’t limited to online businesses either. The proposal would also bind retailers and businesses such as gyms.

‘Click to cancel’ goes even further, however:

• Businesses must clearly disclose their subscription terms, including longer subscriptions (e.g., annual subscriptions) and charges incurred in the event of early cancellation.
• Businesses must get consent before renewing subscriptions or converting free trials into paid memberships.
• Businesses must remind customers that a free or low-cost trial is ending.

Brilliant!

RIP Adobe.
‍

Why?

If you have ever tried to cancel your Foxtel you’ll know why.

If you have ever tried to cancel a gym membership and have been asked to come in and talk to the manager, you’ll know why.

Americans represent 53% of all digital subscriptions worldwide (UBS), spending an average of US$273 monthly. (West Monroe)

89% of American subscribers underestimate their spending on subscriptions: 66% underestimated their subscription costs by more than $200 whilst 13% underestimated by more than $400! (C+R Research)

And a statistic that will probably fail to surprise anyone: 42% of American subscribers admitted to having forgotten a subscription.

I’ve written in the past about:

• Businesses that deliberately borrow from the Foxtel subscription-cancellation playbook and make it almost impossible - or at the very least unpleasant - to unsubscribe: Foxtel.
• Businesses whose entire business model is tricking customers into a subscription and do everything to hide the subscription: PDF Guru, and I speak from experience.

I don’t need to explain that such strategies are as counterintuitive in the medium term as they are user-hostile.

And yet, so many businesses in Australia - media, gyms, telcos - justify these strategies, knowing that the chance of resurrecting a subscriber is so low (<1.5%) anyway, why not try and reduce churn by making it difficult and withholding monthly remittance advice.

Maybe if the shoe were on the other foot, I’d think differently, though having done a lot of work with digital subscriptions, I can safely say my stance hasn’t changed.

Incentivise users to remain with you rather than through disincentive.

It would not be a moment too soon for these laws to come to Australia.

Looking at you Anytime Fitness.

‍