With consumers increasingly disgruntled by 'subscription traps', Australia's competition watchdog is urging businesses offering subscription-based products to properly disclose their Ts&Cs.
"We are putting online retailers on notice that they must clearly and prominently display any ongoing membership fees and we are warning consumers to look out for them when shopping online," said ACCC Chairman Rod Sims.
"The ACCC has seen a spike in complaints from unhappy consumers regarding the use of the relatively new ‘subscription trap’ model by online retailers.
"This involves online retailers treating a consumer’s decision to make a single purchase as consent to signing them up to a paid, ongoing subscription service without adequately disclosing that the subscription service involves ongoing fees."
According to the ACCC, the definition of a subscription trap is taking a consumer’s choice to make a purchase as consent to sign and pay up for a subscription without letting the consumer know.
Subscription traps can occur with a discounted initial price for goods or services, such as free shipping, lower prices, and membership or subscriber-only offers.
After signing up, consumers would be signed up to membership programs and billed a full amount that appeared to be free, with the knowledge of the trap hidden away on other webpages or in fine print.
"The ACCC will continue to monitor any further complaints in relation to these issues and will not hesitate to take appropriate enforcement action against online retailers who attempt to utilise subscription traps in the future," Mr Sims said.
To make sure businesses aren’t misleading their consumers, the ACCC provided the following guidelines to show what businesses that intend to mislead consumers may do:
- 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; and
- use pre-checked boxes that require consumers to actively opt out.