Companies are to be forced to make it “simple and straightforward” for consumers to cancel unwanted subscriptions or get their money back under new rules to stamp out the so-called subscription traps that are costing Britons £1.6bn a year.
Justin Madders, the minister for employment rights, competition and markets at the Department for Business and Trade, told the Guardian: “We want to get money back into people’s pockets when they’ve signed up to things that they didn’t mean or want to.”
Subscription traps are where consumers sign up for a subscription through a free trial or reduced-price offer. If they don’t cancel the trial within a set amount of time, they are often automatically transferred to a costly subscription payment plan.
Madders said he had recently fallen victim himself. “I managed to sign up to something the other day that I did not know was a subscription, so there are some organisations out there that are not acting in good faith,” he said.
“I was buying some train tickets and I signed up to something with a different company that popped up,” he continued. “I’m actually using it as a little bit of a test case to see how easy it is to unsubscribe.”
UK consumers spend about £26bn a year on subscriptions in non-regulated sectors, ranging from streaming services to beauty products. Due to unclear terms and conditions and complicated cancellation routes, nearly 10m of the 155m active subscriptions in the UK are said to be unwanted, adding up to £1.6bn a year, the government consultation document says.
Of these unwanted subscription contracts, an estimated 3.6m are thought to be the result of being rolled over from a free or discounted subscription trial period, while about 1.3m are thought to be the result of auto-renewals.
Making it easier for consumers to extricate themselves from unwanted services is enshrined in the Digital Markets, Competition and Consumer Act, which came into law this year. While the broad principles have been legislated for, there is a need for secondary regulation to implement the regime.
To deal with the same problem, the US Federal Trade Commission has recently adopted a “click to cancel rule” but Madders said he did not expect the UK plan to be as “prescriptive”. He was speaking ahead of Monday’s launch of a consultation on proposals that include how to make refund and cancellation processes simpler.
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“Saying in regulation that you have to have a particular icon on the screen, I’m not sure that we’ll go that prescriptive,” Madders said. “But certainly the intention is that we make it as simple and straightforward as possible for the consumer [to cancel].”
The consultation, which runs until 10 February, is seeking input from businesses offering subscriptions, consumer groups and enforcement agencies. It will also consider other areas, including how people are notified about renewals or the ending of a free trial, and how businesses signpost their cancellation process.