When Mississauga, Ont.-based money coach Vanessa Bowen sat down with a client last year to review the woman’s finances, the two realized something was amiss: The monthly Spotify fee seemed to come out of nowhere.
Did you know you are paying for the music streaming app? No, because she doesn’t use it. Had the company somehow not billed her by mistake? Probably not, Bowen told her. Then the woman remembered.
“She’s like, ‘Oh my god, I was paying for my ex-boyfriend’s Spotify!'” Bowen said. “She was spending all this money on someone who isn’t even in her life anymore.”
Canadians are signing up for subscriptions left and right, and companies are only too happy to comply. It’s quick and easy for the buyer and a steady stream of cash for businesses who can auto-renew subscriptions on a regular basis. But some people forget they signed up at all—and that’s when the bills start piling up.
“We might use it for a few weeks, but then forget about it,” Bowen said. “Life gets in the way … but this charge is still hitting our credit card, still impacting our finances.”
CBC News spoke to 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.
“Fundamental change in the way companies do business”
A woman folds and packs clothes at a clothing subscription company’s warehouse in Stockton, California, September 5, 2019. (Jane Lanhee Lee/Reuters)
Anyone with a newspaper subscription can tell you that pattern has been around for quite some time.
But the 2010 wave of direct-to-consumer e-commerce brands — like Dollar Shave Club, which delivers grooming products by mail — is what started the modern subscription boom, according to Adam Levinter, Toronto-based founder and CEO of Scriberbase and author of the Subscription Boom.
It is now a ubiquitous fact of life. Sure, you probably have Netflix or Disney Plus, but you can also get a monthly mystery box full of cosmetics, or weird tea and coffee flavors, or meal kits with pre-measured ingredients – down to the teaspoon.
“The last 10 years has seen a huge shift in more and more companies moving in this direction, not just e-commerce companies, but platform companies, software companies, service companies,” Levinter said.
Financial services firm UBS predicts the global subscription market will grow to US$1.5 trillion by 2025, more than double the US$650 billion it estimated in 2021.
WATCH | People cancel their subscriptions:
Canceled streaming subscriptions are on the rise
One in three Canadians have canceled their subscription to a streaming service in the past six months, according to a study by the Angus Reid Institute.
“This is a major 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.”
Businesses are more interested than ever in building long-term relationships with the consumers who buy their products. While it used to be the job of companies to bring customers back for repeat transactions, the emphasis on subscriptions has changed that.
“In the subscription business, the responsibility now shifts to the customer, so the company assumes the customer is otherwise satisfied with the product or service and will continue to charge that customer forever unless the customer decides to opt out,” Levinter said.
Bowen, who runs a financial coaching firm called Mintworthy Co., said the problem is that people rarely want to part with their subscriptions. More than 85 percent of Canadians have at least one monthly subscription, Angus Reid research since October found.
Vanessa Bowen, a financial coach based in Mississauga, says she helps her clients manage their monthly bills. “Life gets in the way, it gets in the way, but this charge is still hitting our credit card, still impacting our finances.” (Submitted by Vanessa Bowen)
But the same survey found that one in three Canadians had canceled a subscription in the previous six months, with half citing the ongoing cost-of-living crisis. Those who stuck to their subs might just find it hard to say for so long, Bowen said.
“Once you have a subscription in your life, even if you don’t use it all the time, your thinking gets to that point, ‘Well, maybe I’ll 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 to do it that way: the dreaded “subscription trap.” A Vancouver woman told CBC’s The Cost of Living last year that she was forced to cancel her credit card after a company made it extremely difficult to unsubscribe.
“It would help if there was more standardization of subscription contracts and time slots,” Kenneth Whitehurst, executive director of the non-profit Consumer Council of Canada, said in an email to CBC News.
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Whether subscriptions can be canceled easily 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 the concern for people is that they’re allowing fixed-term agreements with periodic payments without wanting to.”
Adam Levinter, Toronto-based founder and CEO of Scriberbase and author of The Subscription Boom, says the subscription economy has fundamentally changed the way businesses and consumers interact. (Submitted by Adam Levinter)
“There needs to be clearer rules on cancellations, in general, for low-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 following an investigation by the Competition Bureau. But the bureau is not the regulatory equivalent of the stricter U.S. Federal Trade Commission because Canada’s consumer market is much smaller, Levinter said.
Horror stories led the US federal regulator to accelerate its enforcement measures in 2021 after several high-profile companies — from SiriusXM radio to Apple — faced lawsuits from customers who said the businesses made subscriptions too difficult to cancel or engaged in questionable auto-renewal practices .
That’s why it’s critical that companies make it easy for customers to reach out to them with questions and concerns — and give them control over their subscription packages, Levinter added.
“If you make it difficult for the customer to do that, you end up with a lot of problems,” he said.
“Merchant’s Black Eye”
Customers use a TD bank ATM in Vancouver in 2018 (Darryl Dyck/Bloomberg)
Cutting up your credit card is a desperate measure. But most Canadians will have an easier way to deal with unwanted subscription fees: they can ask their credit card company for a chargeback, in which a bank transfers money from the merchant’s account back to the customer.
“Chargebacks are a merchant’s black eye,” Levinter said.
Businesses that accept Visa or Mastercard, for example, have a responsibility to keep chargebacks below a certain threshold. If chargebacks increase, that’s bad news for the company.
“You can stop processing your card, which means 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 little murkier if you’ve made a purchase using a debit card, because a company can’t protect you if you’ve shared your PIN or in some way encouraged its unauthorized use.
Maybe you just want to cut back for the sake of your wallet. If so, keeping track of your monthly expenses — looking at your credit card statements for a Spotify mischarge here or there — is the best way to catch money slipping through the cracks, Bowen said.
A whole host of subscription management apps have also appeared in recent years, from MySubscribe to Mint to Bobby.
But auto-renewing subscriptions are a two-way street.
“I think companies should have [the] responsibility to remind users, “Hey, your subscription is coming up, do you want to cancel?” and I have an easy way for us to click that cancel button so we can say, ‘thanks, goodbye,'” Bowen said. “It was nice, but right now I’m going to put my money into something else.”
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