Posted on 11/22/21
| News Source: Washington Post
Sometimes we need to pause and take a moment to celebrate the small things. In that spirit, let us note the Federal Trade Commission’s recent crackdown on monthly subscription and membership services.
Consumers have complained for years about online offerings that are easy to enroll in but all but impossible to escape. Finally, help may be at hand. Under the leadership of Biden appointee Lina M. Khan, the Federal Trade Commission issued a policy statement last month making it clear the subscription service status quo would no longer hold.
The FTC wants to put an end to situations where consumers have to navigate multiple and confusing online menu options just to stop buying a product or service. Or ones where people who signed up online are forced to hunt down a phone number to eliminate a monthly charge. As Khan tweeted, “Businesses should provide cancellation mechanisms that are at least as easy to use as the method the customer used to buy the product or service in the first place.”
These sorts of unwanted subscription charges are almost certainly a growing blight. Online subscriptions are booming, and they were growing at double-digit rates even before the pandemic. Six in 10 Americans subscribe to at least one online service, with 46 percent signed up for at least one streaming platform. UBS Global estimates that subscriptions will be a $1.5 trillion market by 2025. Of course, companies like the monthly payments that sustain subscriptions, considering them a form of all-but-guaranteed revenue. And many people like the services they signed up for.
But: The issue isn’t the many happy customers. (If you are reading this article, I hope you are one of them; The Post, like many newspapers, is a subscription service.) The problem is that many are not.
The technical term to describe how services can operate is “negative option marketing.” That consists of free trial offers that convert to paid subscriptions, automatic annual or monthly renewals, and everything in between. Things go wrong when these are employed in combination with “dark patterns” – that is, confusing language, inadequate notice of signing up and charging customers, and practices that put multiple obstacles in the way of people who want to cancel. “It has a real impact on consumer finances,” says Sarah Miller, executive director of the American Economic Liberties Project, an anti-monopoly advocacy group. “It’s essentially a form of soft theft.”
A spokesman for the FTC tells me that the commission receives thousands of complaints about subscriptions annually. That shouldn’t surprise. The experts believe a large majority of consumers have had some sort of experience – perhaps multiple experiences – with the phenomenon.
Indeed, Rep. Lisa Blunt Rochester, D-Del., who has sponsored legislation intended to address the issue, spoke at an FTC session about a birdwatching app her mother sent her that turned out to have inspired numerous complaints about how hard it was to get out from under its $39 monthly fee. And Miller of the American Economic Liberties Project told me about a recent experience with a dark pattern at a subscription food service, which demanded her credit card info when she attempted to use a gift certificate to pay for a purchase. Yes, it charged her for a second box after the initial transaction. Yes, she was able to get the charge reversed. But it shouldn’t be this way. “It’s deceptive,” Miller says.
Maybe this sounds like a minor issue, especially when compared with the FTC’s antitrust lawsuit against Facebook. But it is exactly these sorts of small consumer annoyances that contribute to a sense many Americans have that life is increasingly rigged against them and that those in charge are unresponsive to their needs.
And in a society where we are encouraged to view our role as consumers and shoppers as a way of participating in civic life, shady behavior by businesses contributes to the pervasive cynicism. It’s all too easy to think that things are falling apart when someone is taking your money and you don’t want them to do so.
Here’s hoping the FTC’s enhanced regulations make such events more rare. This stuff matters to people on a day-to-day basis. When consumer interactions go wrong, they can leave us feeling inconsequential, powerless, victimized and spitting mad. It’s good that Kahn recognizes this. It’s even better that she’s trying to do something about it.