Category Archives: Marketing and Media

Lots of people are getting cancelled these days. For most of them, it wasn’t something they wanted.

I, on the other hand, wanted desperately to be cancelled, and my best efforts yielded exactly no results.  It left me somewhere in between ticked off and sad; call it pissappointed.  My story is below, in blue.

We are referring, of course, to subscription auto-renewals (aka ‘evergreen clause’ or ‘negative option clause’, or in the words of one congressman, ‘zombie contracts’).

Auto-renewal practices are a critical way of sustaining revenue, but if done too aggressively, there are potential huge costs in losing customer goodwill and provoking litigation.

https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2017/02/27/didnt-see-that-renewal-notice-some-states-are-trying-to-help

One survey found that 59% of consumers had been auto-renewed in one way or another without their informed consent, at an average cost of $186.  https://www.nclnet.org/ftc_autorenew

This is often related to free trials with a commitment buried in the fine print, but it’s not always the case, as I experienced.

Auto-renew allows companies to lock in revenue, often without the consumer even noticing. And they rely heavily on this practice; you will have to pry a company’s cold, dead hands off your money (usually with a lawyer’s help) before you get anything back.

Turns out I’m not the only one who’s been disappointed.

As a result, a lot of states are working on legislation to control abuse of the auto-renew, led by California’s Auto-Renewal Law (ARL), which took effect July 1, 2018 and prohibits automatic renewal of subscription or service fees without first presenting consumers with certain terms, and obtaining their affirmative consent.

The questions here:

• What is the moral obligation to inform customers before they are going to be charged?
• Is the retention of some proportion of ticked-off customers worth the blowback when they tell their friends/colleagues about it?
• What actions can you take as a marketer or as a consumer, to avoid the need for litigation?

My story:

• April 2018 – signed up for one year of online survey company’s premium package to support consulting work.  Not aware of any auto-renew commitment.
• April 2019 – found out my credit card was automatically charged for another year.  Still used the service so no big deal; still, irritating to get neither a heads-up nor a confirmation that a charge was made.
• March 2020 – didn’t need service anymore.  Through my account portal, cancelled and switched off auto-renew a month before renewal (on advice of the company).
• May 2020 – surprised to find that I’d been auto-billed again, despite cancelling.   No email notice.
  • Emailed company: ‘must have been a mistake; don’t need it anymore, please reverse charges, thank you’.
  • Company responds that a) their records show that auto-renew was reinstated on my account (which it definitely wasn’t!)  b) you are ineligible for an exception because it renewed over a month ago  c) we cannot give full or partial refund.  d) you should know this; it was in our T&C when you signed up (you noob).
    
  • Increasingly animated emails from me met with consistently anodyne ‘geez, we’re real sorry, you messed up, we can’t do anything about it’ responses.
  • Stopped payment on credit card; company now has cover and responds with: “Although our system showed that you re-instated your subscription, from your words, I know this was a mistake and clearly a human error.  Even if I could make an exception for you, because a dispute has been filed with the card issuer or bank, we can’t take any action on the account.”
  • Thankfully, the charge was ultimately reversed. 

But it was LOTS of effort, and let’s just say it won’t help their Net Promoter Score if I am asked for my opinion.

————————————————————————————

This is a big, popular, generally well-regarded company and they’re clearly taking all steps possible to maximize revenue retention.  How many other companies are using the same tactics?

Well, in the last few years, over 100 companies have been sued for deceptive auto-renewals, including those shown below (spawning a cottage industry of how to disable auto-renew):

Sirius XM

Noom

Angie’s List

Dropbox

Spotify

Hulu

SeaWorld

Birchbox

LifeLock

AAA

Blizzard Entertainment (World of Warcraft)

Gunthy-Renker (Proactiv skin products)

Apple

eHarmony.com

Tinder

Blue Apron

McAfee

Ancestry.com

New York Times

Consumer Reports

WalMart’s Beauty Box

It is no secret that a renewal is way more profitable than acquiring a new customer, and the fight for customers is fierce, so the focus on retention is understandable.

But at some point the negative impact of heavy-handed tactics, in terms of brand goodwill and image (not to mention litigation costs), could overwhelm the benefit.

My advice:

IF YOU’RE A MARKETER OF SUBSCRIPTION PRODUCTS OR SERVICES:

• Become familiar with, and follow, California’s ARL; it looks to be the standard going forward
• Offer in-between solutions that give the customer relief, but keeps them in the fold and positive.  (Example: when I tried to cancel my Audible subscription when my commute was drastically shortened, they offered a deal of $10/year to retain the books I already had, rather than losing everything.  That was a good solution for me.)

IF YOU’RE A CONSUMER:

• Read the fine print on everything you sign up for, and keep careful records
• If you want to downgrade your level, challenge the company to provide a better option.  Frequently they’ll do anything possible to keep you.
• Certain apps like TRIM https://www.asktrim.com/ automatically detect recurring charges on your credit cards; they can help identify needless renewals and help with cancellations

IF YOU’VE READ THIS FAR:

• Thanks for your patience and loyalty. You have automatically been renewed to follow The Armchair MBA for another 5 years.  You have no opt-out before that time.