If you want to unsubscribe from Amazon Prime in Europe, there is a simple two-step process. But customers in Australia must navigate four convoluted steps, with the wording and location of the cancellation button changing between each screen.
Now Australian online businesses that put up hurdles to make it harder for customers to unsubscribe from their services may face a crackdown from the federal government, with plans to be unveiled later this year.
The practice of “forced continuity” or “subscription trapping” involves building design features of a website or app in a way that impedes a customer’s ability to cancel a particular service.
The chair of the Australian Competition and Consumer Commission (ACCC), Gina Cass-Gottlieb, said in a speech to the National Press Club on Wednesday a prohibition on unfair trade practices would help protect consumers and small businesses “exposed to manipulative practices designed to get them to agree to unfair or unfavourable contract terms”.
The consumer watchdog has called for new powers in Australian consumer law to crack down on such practices since 2017. A spokesperson for the regulator said subscription traps can cause “significant harm to consumers and some small businesses”.
“These practices make it difficult for consumers to cancel subscriptions after fixed-term periods, with the consequence that many subscriptions roll over to paid subscriptions despite consumers no longer utilising or wanting them,” the spokesperson said.
The Amazon discrepancy was uncovered last year by the Consumer Policy Research Centre (CPRC), which said Amazon agreed to shorten the cancellation process for European customers following a 2022 finding by the European Commission that Amazon had breached the unfair commercial practices directive.
In response to Guardian Australia’s questions, Amazon did not directly explain why the unsubscribe process was different for Australian customers, arguing it is “clear and simple” for customers to sign up for and unsubscribe from Amazon Prime.
“We continually listen to customer feedback and look for ways to improve the customer experience,” the spokesperson said.
The CPRC labelled the tactic “Hotel California”, for the song which includes the line: “You can check out any time you like but you can never leave.”
Subscription traps are more difficult to prevent in Australia due to an absence of the kind of unfair trading practices laws that exist in Europe and elsewhere, but that could soon change.
The ACCC spokesperson said the organisation “is concerned with unfair business practices that exploit consumers’ behavioural biases, undermine consumer choice or dissuade a consumer or small business from exercising their contractual or other legal rights”.
Such practices are not covered by current law because they are not considered misleading or deceptive conduct, false or misleading representations, unfair contract terms, or unconscionable conduct, according to the regulator.
The call for new powers is supported by consumer groups and legal experts. The chief executive of the CPRC, Erin Turner, said too many companies were engaging in the practice.
“CPRC research has found that 76% Australians have experienced difficulty cancelling an online subscription, including unsubscribing before a free trial ends,” she said. “This practice is collectively costing a lot of us money and should be stopped through new consumer laws.”
Rob Nicholls, an associate professor of regulation and governance at the University of New South Wales, said it would be a big change for Australia.
“It’s actually ensuring that you’ve got the option to get out of subscription and gives you the option of actually deleting the data that’s been collected about you,” he said. “It’s new to Australia and it needs going to be a big change in the Australian consumer law.”
The assistant treasurer, Stephen Jones, met with state and territory consumer affairs ministers in September last year, when it was agreed the federal government would progress consultation on proposed reforms to unfair trading practices.
The consultation is likely to be released in the coming months.
“A Consultation Regulation Impact Statement [RIS] is currently being prepared and is expected to be published in 2023,” a spokesperson said. “The Consultation RIS will seek further evidence on the nature of unfair trading practices and the extent of any consumer and small business harm arising from potential gaps in the Australian Consumer Law.”
The US Federal Trade Commission introduced a proposal last month that would require companies with customers on recurring payment programs to offer easy online cancellation.
