Budget will outline plans to better protect consumers who sign up for free trials that can convert into paid membership
“Subscription traps” that turn a month’s free trial into regular paid-for custom will be targeted in the budget next week.
Philip Hammond will set out elements of a forthcoming consultation on better protection for consumers who sign up for such offers, familiar from Amazon Prime, Netflix, magazine subscriptions and gym memberships.
The Treasury said one problem was that regular payments could be deducted from people’s accounts even if they had not given explicit permission for this.
A report last year by Citizens Advice said more than 16 million people had signed up to continuous payment authorities (CPAs) over a 12-month period, many of them online.
It said awareness of such payments was low and most people did not realise how they differed from a regular direct debit. One problem can be that terms and conditions are not displayed clearly or prominently. A Citizen’s Advice online survey found 84% of people did not realise they had agreed to a subscription.
The Treasury said the crackdown would form part of a wider consumer green paper from the Department for Business, Innovation and Skills that would “closely examine markets which are not working fairly for consumers”.
On subscription traps, one option being examined is ensuring people are given sufficient notice before a payment is taken.
Another element may be shortening and simplifying statements of terms and conditions, to avoid excess length and jargon that puts people off reading and understanding what they are signing up to.
Possible options include making it standard for consumers to have to tick a box confirming they have read and understood any small print, and investigating which terms most commonly confuse people.
There are also proposals for new powers to impose fines on companies that mistreat customers.
Gillian Guy, the chief executive of Citizens Advice, welcomed the plan on subscription traps. “From beauty treatments to gym contracts, consumers are signing up to free trials or one-off discounts only to find that money is then taken from their account each month,” she said.
“The government’s plan to make sure people are told if a payment is due to be taken will give consumers the opportunity to put a stop to it, so they can make sure their money stays in their bank account.
“Subscription traps are one of the many nasty surprises that can be hidden in the small print. Firms are bamboozling consumers with lengthy terms and conditions and complicated clauses, making it really difficult for people to know what they’re signing up to. The government’s welcome clampdown in this area will help people know where they stand and challenge unfair practices.”
Source : theguardian.com