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The federal government is under pressure to increase the consumer regulator’s power to stop companies trapping people in ongoing subscription payments.
Subscription trapping occurs when customers face hurdles or difficulties unsubscribing from a service and are forced to keep paying.
Forgotten and unused subscriptions are also costing Australia $8 billion annually.Credit: iStock
Under the existing legislation, the Australian Competition & Consumer Commission cannot take anything but the most egregious cases to court, and the government has yet to release a regulatory proposal to bring fair trading legislation up to speed with other countries.
Consumer Policy Research Centre digital policy director Chandni Gupta said Australian legislation and protections against dishonest subscription models were lacking.
“While other countries in the EU, the UK, US and Singapore have prohibitions on unfair trading with laws against unfair business practices, Australia doesn’t,” she said. “That means that you’ve got subscription traps that exist here that might not exist overseas.
“We’d like to see enforcement in place that allows the regulator to act on things that are apparently unfair, but not illegal.”
Research from the Consumer Policy Research Centre last year found 76 per cent of Australians had experienced difficulty in cancelling an online subscription, while 39 per cent found cancellation practices deceptive.
Forgotten and unused subscriptions are also costing Australia $8 billion annually, research from ING Australia found, and Australians waste $1261 a year on services they have yet to cancel.
HelloFresh is under investigation in New Zealand for subscription trapping.Credit: Hello Fresh
The government plans to release a consultation regulation impact statement on unfair business trading practices, which will examine subscription issues, and passed legislation to outlaw unfair contract terms in September last year.
HelloFresh is being investigated by New Zealand’s Commerce Commission over breaches of the Fair Trading Act following complaints about alleged subscription issues.
While it is not under investigation in Australia, multiple customers have published complaints about their service online.
Julie Tait was unwillingly resubscribed to the meal delivery kit service after browsing a menu online.
She placed an item in the cart but never checked out or updated her address or credit card, both of which had changed since her previous subscription ended.
She soon received an email stating her delivery would be on the way, followed by messages requesting payment.
Julie Tait found herself resubscribed to HelloFresh without her knowing. Credit: Kelly Barnes
HelloFresh eventually agreed to cancel the order after she called them.
“For something to hit a cart and for that to turn into an order, that crossed a line,” Tait said.
A spokesperson for HelloFresh did not comment on the issue of subscription complaints but said its customer care team would conduct a “thorough investigation” of concerns on a case-by-case basis.
Senior Campaigns and Policy Advisor at consumer advocacy group Choice Alex Soderlund said the ACCC could only litigate against unconscionable conduct or deception.
“Unfair trading cases aren’t egregious enough to reach the unconscionable conduct bar, so things fall through the cracks,” she said.
A key issue was a lack of customer service for online subscriptions, meaning emails or calls about complaints or cancellation requests could go ignored, she said.
“We really need new laws, and hopefully with the consultation paper, there’s a strong option to give Australian consumers the protection they need.”
The CPRC research also found 83 per cent of Australians experienced negative consequences due to design features aimed at influencing their behaviour on a website or app, ranging from spending more money, accidentally buying or signing up for something, or sharing more personal information than they wanted to.
These features are called “dark patterns” – manipulative online design intended to guide the user towards choices that benefit the business, that the user may not be consciously aware of.
The Amazon unsubscribe process requires four separate steps in Australia; the cancellation button appears in a different location at each step. It only takes two steps in Europe.
Last month, the US Federal Trade Commission filed charges against Amazon for using “manipulative, coercive, or deceptive user-interface” dark pattern designs to “trick consumers into enrolling in automatically renewing Prime subscriptions”.
A spokesperson for Amazon Australia disputes the FTC’s claims, arguing customers enjoy the service and the design is clear and simple to sign up and cancel a membership.
“As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience,” the spokesperson said.
Sydney University law Professor Yane Svetiev said these designs were “common practice” and difficult to regulate against under existing laws.
“The most successful approaches abroad involve steering companies away from types of business models, identifying complaints in real-time and highlighting problematic practises, rather than litigation,” he said.
Pressure can be placed on organisations, but also on platforms such as Apple or Android, he said, to regulate unfair practices, such as by banning automatic subscriptions after a free trial.
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