“Mind the subscription trap" - Highland Council Trading Standards warn consumers
As part of National Consumer Week 2017 campaign, “Not what you signed up for”, Highland Council Trading Standards are keen to warn consumers to be on their guard when signing up to free trials or one-off discounts.
Subscription traps are often linked to free trial scams for products such as anti-ageing skin creams or other enticing offers that seek to lock the consumer into costly repeat payments.
Scammers of such products exploit what is known as a ‘Continuous Payment Authority’ (CPA) by requesting that a consumer makes a ‘one-off’ payment for postage and packaging for the free trial of a product. The scammer will ask for the consumers debit card details as proof of identity and age and will keep consumer details so they can continue to obtain money from the consumers account on a monthly basis. Information about continuous payments is often hidden in the small print of an online offer. Once payment details have been handed over the consumer finds that they are locked into costly repeat payments that can be difficult to stop.
David MacKenzie, Trading Standards Manager explains: “Recent cases highlighted nationally have found consumers have paid up to £150 after applying for a free trial of slimming pills or similar products. Unfortunately these types of instances are not uncommon. It may be that the consumer is not aware of such payments are being made unless they spot the amounts coming out of their bank account, sometimes weeks, if not months later.”
Mr MacKenzie adds: “As part of a National Consumer Week 2017, we are keen to advise consumers to be wary of responding to free offers and discounts online and to read terms and conditions carefully before they respond. However, if a consumer inadvertently signs up to a subscription trap, they should contact their bank or building society immediately and instruct them to cancel the continuous payment authority.”
Subscription traps use deliberately misleading practices, and the business involved uses deceptive language and misleading terms and conditions.
However, consumers can also unwittingly sign up for other services by subscription and as a result can face problems cancelling future payments. This can result in financial hardship as consumers may sign up for an introductory offer only to find that payments continue to be made, at a much higher rate, long after the introductory offer has ceased.
Businesses who require payments to be made by subscription (e.g. businesses selling gym membership, health or beauty products, streaming services of periodicals/book clubs) should ensure that they give clear and transparent pre-contract information regarding subscription periods; renewal schedules and total monthly costs to consumers before they sign as well as provide advice on how a consumer can cancel the ‘consumer authorisation payment’ with their bank or building society.
It is estimated that two million people from across the UK still experience issues cancelling recurring payments for subscriptions without their apparent authorisation. That’s likely to be over 7000 consumers in the Highland area alone.
A social media campaign, #BeforeYouSign #NCW17 has also been launched as part of NCW 2017. Daily tweets and Facebook posts will be issued providing both advice and guidance to businesses and consumers.
The Chartered Trading Standards Institute (CTSI), in partnership with the Consumer Protection Partnership (CPP), has released two video animation guides for consumers, businesses and financial institutions on subscription issues.
The first animation is aimed at businesses who offer subscriptions to their customers.
The video can be accessed by going to: https://www.youtube.com/watch?v=vlrwW4w3Jf8
The second animation gives practical advice for consumers to make them think before they sign and not be tempted by free trial offers. If consumers find themselves caught in a trap then banks need to be aware of their responsibilities to customers struggling with subscription issues. This video can be accessed by going to: https://www.youtube.com/watch?v=OraEsC9SHRA
The animations highlight important issues faced by UK consumers and provide advice on legal obligations to businesses. The videos are produced alongside Business Companion, and discuss subscription periods, renewal schedules and total monthly costs, as well as continued payment authorities.
Business Companion is a free government backed business advice website, offering important, up-to-date consumer law information accessible to all.
For more business-facing advice, visit www.businesscompanion.info
Highland Council Trading Standards work in partnership with Citizens Advice Consumer Service. Concerned consumers can contact Citizens Advice Consumer Service, who offer a free and confidential consumer advice helpline on 03454 04 05 06 or visit their website: https://www.citizensadvice.org.uk/scotland/consumer/ to report your concerns online.