When Mississauga, Ontario-based financial adviser Vanessa Bowen sat down with a client last year to review the woman’s finances, the couple realized something was wrong: A monthly Spotify charge had apparently popped up out of nowhere. the nothing.
Did you know you were paying for the music streaming app? No, because she doesn’t use it. Had the company charged you by mistake? Probably not, Bowen told him. Then the woman remembered.
“She’s like, ‘Oh my God, I’ve been paying for my ex-boyfriend’s Spotify!'” Bowen recounted. “She was spending all this money on someone who wasn’t even in her life anymore.”
Canadians are signing up left and right, and companies are happy to do so. It’s quick and easy for the buyer, and a steady flow of cash for businesses that can automatically renew subscriptions on a regular basis. But some people forget they’ve signed up, and then the bills start piling up.
“Maybe we used it for a couple of weeks, but then we forgot about it,” Bowen said. “Life gets in the way…but that charge continues to affect our credit card and it continues to affect our finances.”
CBC News spoke with experts who shared how to stay on top of those subscription fees and what to do when you just can’t find the unsubscribe button.
‘A fundamental change in the way companies do business’
Anyone who subscribes to a newspaper can tell you that the model has been around for a long time.
But a wave of direct-to-consumer e-commerce brands in 2010, like Dollar Shave Club, which delivers grooming products by mail, is what started the modern subscription boom, according to Adam Levinter, founder and CEO of Scriberbase and author of The rise of subscriptions.
Now, it’s a pervasive fact of life. Sure, you probably have Netflix or Disney Plus, but you can also get a monthly mystery box filled with cosmetics, wacky flavors of tea and coffee, or meal kits with pre-measured ingredients, down to the teaspoon.
“The last 10 years have seen a massive shift in more and more companies moving in this direction, not just e-commerce companies, but also platform companies, software companies, service companies,” Leviinter said.
Financial services firm UBS predicts the global subscription market will grow to $1.5 trillion by 2025, more than double the $650 billion estimated for 2021.
CLOCK | People are canceling their subscriptions:
One in three Canadians have canceled their subscriptions to streaming services in the past six months, according to a survey by the Angus Reid Institute.
“This is a big, fundamental change in the way companies do business. And at the same time, it’s a fundamental change in the way consumers interact with companies.”
Companies are more interested than ever in building long-term relationships with the consumers who buy their products. While it used to be up to businesses to bring customers back for repeat transactions, the emphasis on subscriptions has changed that.
“In a subscription business, the onus is now shifted to the customer, so the company assumes the customer is satisfied with the product or service and will continue to bill that customer in perpetuity unless the customer chooses to cancel,” Leviinter said.
Bowen, who runs a financial advisory firm called Mintworthy Co., said the problem is that people rarely want to ditch their subscriptions. More than 85 percent of Canadians have at least one monthly subscription, an Angus Reid poll October found.
But the same survey showed that one in three Canadians had canceled a subscription in the previous six months, with half of them citing the ongoing cost-of-living crisis. Those who held on to their subs might have a hard time telling that long, Bowen said.
“Once you have a subscription in your life, even if you don’t use it consistently, your mindset gets to this point of ‘Well, maybe I need it next month or next week,'” Bowen said.
“Once you have it, it’s very hard to say goodbye.”
a longer goodbye
Saying goodbye can be especially difficult when the company wants it to be so: the dreaded “subscription trap.” A Vancouver woman told CBC cost of living last year that she was forced to cancel her credit card after a company made it extremely difficult to get out of a subscription.
“It would be helpful if there was more standardization of subscription contracts and time slots,” Kenneth Whitehurst, executive director of the nonprofit Consumers Council of Canada, said in an email to CBC News.
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Whether subscriptions can be easily unsubscribed is a matter of opinion, usually related to whether a website is user-friendly, he added. The council doesn’t get many complaints about online subscriptions, but “I think people’s concern is that they authorize installment agreements with recurring payments, without knowing it.”
“There needs to be clearer rules around cancellation, generally for small value recurring subscriptions.”
A Canadian company pleaded guilty last year to luring shoppers into a monthly subscription to health and dietary supplements, and was fined $15 million after an investigation by the Competition Bureau. But the bureau is not a regulatory equivalent to the stricter US Federal Trade Commission, since Canada’s consumer market is much smaller, Leviinter said.
The horror stories prompted the US federal regulator to ramp up its enforcement measures in 2021, after several high-profile companies from SiriusXM radio to Apple faced lawsuits from customers who said the companies had made subscriptions too difficult to cancel or engaged in suspicious practices. automatic renewal.
That’s why it’s crucial for companies to make it easy for customers to contact them with questions and concerns, and give them the ability to control their subscription packages, Leviinter added.
“If you make it difficult for the customer to do that, you’re going to end up in a lot of trouble,” he said.
‘A black eye on the merchant’
Cutting up your credit card is a desperate measure. But most Canadians will have an easier route to navigate unwanted subscription charges: They can ask their credit card company for a chargeback, in which a bank transfers money from the merchant’s account to the customer. .
“Chargebacks are a black eye for the merchant,” Leviinter said.
Businesses that accept Visa or Mastercard, for example, have a responsibility to keep their chargebacks below a certain threshold. If chargebacks increase, that’s bad news for the company.
“You can opt out of processing your card, which means that as a business, you will no longer be able to process Visa or MasterCard transactions, and without the ability to process transactions, you have no business.”
The process is a bit more complicated if you made a purchase with a debit card, because a company can’t protect you if you shared your pin or otherwise encouraged its unauthorized use.
Maybe you just want to cut back for the sake of your wallet. If so, keeping track of monthly expenses — perusing your credit card statements for a erroneous Spotify charge here or there — is the best way to catch money slipping away, Bowen said.
A host of subscription management apps have also emerged in recent years, from MySubscribe to Mint to Bobby.
But auto-renewable subscriptions are a two-way street.
“I think companies should have [the] responsibility to remind consumers, ‘Hey, your subscription is coming up, do you want to cancel?’ and have an easy way to click the cancel button so we can say ‘thank you, bye,'” Bowen said. “It’s been nice, but I’m going to spend my money on something else now.”
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