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Online Subscription Traps

Delia Rickard
2nd August, 2016

The Australian Competition and Consumer Commission is warning consumers to beware of fees for ongoing membership services when making discounted purchases online.

‘Subscription traps’ occur when online retailers take your decision to make a single purchase as consent to sign you up to a paid subscription service without adequately disclosing continuing fees. By the time you realise ongoing payments are involved, you may have lost hundreds of dollars.

Fabletics, a US-based exercise clothing retailer, has agreed to change its website after the ACCC raised concerns about inadequate disclosure of conditions and monthly costs (US $49.95, which applies as a store credit) of its ‘VIP’ membership program. We received complaints from Fabletics customers who said they were unaware they had signed up to monthly subscription payments, and had difficulty cancelling their memberships.

Many consumers also complained about online retailer Scootprice and how it failed to adequately disclose fees for its ‘Premium’ membership ranging from $29.90 per month to $99 per quarter. Scootprice cooperated with our investigation and agreed to refund customers.

Membership programs may offer genuine benefits, but retailers should clearly disclose charges so that consumers can make an informed decision about whether or not to join. They should also clearly disclose how to cancel the subscription. Both Fabletics and Scootprice will make membership fees clearer and more prominent on their website and in the checkout process.

Signs of trap

Consumers should be careful when making purchases online as some retailers may:

  • not be upfront about additional costs such as subscription fees
  • not clearly disclose the nature of subscription services
  • not make the terms and conditions readily available by hiding them away on separate pages, in hard to read grey text or fine print
  • place restrictions on the cancellation of the unwanted services
  • use pre-checked boxes that require consumers to actively opt out

Delia Rickard is Deputy Chair of the Australian Competition and Consumer Commission.

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