Why do they make it so hard to cancel subscriptions?

Updated 12/11/2024
Why do they make it so hard to cancel subscriptions?

Time to read : 4 Minutes

Long gone are the days when your gym membership and pay TV were the only regular payments coming out of your account. Nowadays there’s a subscription for everything. But while signing up might be as easy as a simple click, getting out of the agreement can be a lot harder. 

According to findings by the Consumer Policy Research Centre (CPRC):

  • 48% of Australians have spent longer than they expected trying to get out of a subscription.  

  • One in 10 have given up trying to cancel and just kept paying for the service. 

  • 75% reported a negative experience of some kind when trying to cancel a subscription. 

These negative experiences can put people off trying to cancel other subscriptions, causing long-term financial implications. 

The problem, says the CPRC, is that while other countries have passed laws to stop companies trapping you in subscription hell, Australia has yet to do the same. And there are some dodgy tactics that can be used to keep you signed up. 

The subscription trap

In 1976, The Eagles song Hotel California had the words: “you can check out any time you like, but you can never leave”. While there is some debate around what the Hotel California truly represents in the song, it’s become a metaphor people often use for the subscription trap companies try to put consumers in. 

There are a number of tricky ways organisations keep you subscribed. Here are some of the most common:

Hidden cancellation options

Many companies intentionally bury the cancellation option deep within their websites, making it difficult to locate. Others require subscribers to call customer support, adding another step that many people avoid. 

If you do need to call, it can be difficult to find a phone number on the website. If your call is answered, you’re likely to be put on hold for what seems forever or you end up having to be transferred once your call is answered by a human. 

Feedback loops and delays

Some services require customers to complete surveys before cancelling or impose “cooling-off periods,” which extend the timeline before the cancellation takes effect. This means they may squeeze more money from you as you roll into another billing cycle.

Automatic renewal and free trial conversions

Free trials often come with automatic renewal, sometimes at full price. Unless consumers cancel before the trial ends, they are automatically enrolled, often without explicit reminders. 

Be aware: if you’re being offered a free trial and your credit card details are being requested, this is a red flag your card will be charged once the free trial ends – if you haven’t cancelled in time. 

Always mark your calendar as a reminder to cancel. You may decide you don’t want to cancel but at least it’s on your terms. If you do wish to cancel, allow a couple of extra days before the trial comes to an end, just in case there are any hiccups. 

Remember: the company may not remind you that the free trial is coming to an end, so it’s best you take precautionary steps. 

Guilt trips

How many times have you gone to cancel a service only to fall for a new offer, or another promise? They may also ask questions in a way to make you feel guilty. Companies try to catch you in a guilt cycle to delay your cancellation and draw you back in. 

Sometimes offers can come after you manage to unsubscribe, leaving a bad taste in your mouth. The guilt experienced could make you think twice before you unsubscribe from another service in the future. 

How you can check out

The Australian Competition and Consumer Commission (ACCC) has increased its focus on companies using these tactics, but without regulatory changes the organisation is limited in what it can do. 

Regulators want a number of changes, including: 

  • straightforward cancellation options

  • automatic renewal reminders 

  • the removal of unnecessary barriers. 

The CPRC is pushing for the ACCC to have the ability to publish a ‘blacklist’ of companies that flaunt these requirements so consumers know who to avoid

In the meantime, if a company has misled or deceived a consumer, Australian Consumer Law provides some protection, and you can report to the ACCC. But otherwise, there’s very little you can do. Here are some good tips to follow to protect yourself: 

Check cancellation terms before signing up

Whether it’s a free trial or a new gym membership, reading the cancellation policy before you sign up will help you avoid any particularly tricky clauses. If you’re signing up online, these will be available to read, and if you’re signing up on the phone or in person you can ask them to take you through the policy. 

Nobody likes reading the fine print, but knowing what you’re up for may be worth the effort. 

Set calendar reminders

Don’t expect to get a reminder before your subscription renews or a charge comes out. Setting reminders in your calendar will help you get ahead of a new cycle. 

Look for alternate channels for cancellation

Seeing the trouble consumers can go through to cancel subscriptions, some providers have offered to take the burden from you. Both Apple and Google phones now have unsubscribe options for some apps and services, allowing you to cancel through them rather than deal with a provider. 

If you’re struggling with an unsubscription form, you could also try emailing or calling the company directly – if that proves easier. 

Document all interactions

The lack of regulation does make it tricky to report a company that is holding you in a subscription loop, but if you are being deceived or misled you can report to the ACCC. Documenting all interactions in the unsubscription process will make this easier. 

Bottom line

The subscription economy shows no signs of slowing, and with an increasing focus on regulation and fairer practices, we should see dodgy subscription tactics reduce. But until then, the pressure is very much on consumers to keep track of their finances and watch out for traps. 

Subscriptions can be small charges, but don’t forget that over time that money adds up, particularly if you have a number of them leaving your account regularly. 

Set up calendar reminders, keep a log of everything you’ve signed up for and watch out for tricks to keep you signed up for longer. Hopefully you won’t get stuck in the Hotel California subscription trap! 

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