Are you falling into the trap?
Payment via subscription is booming and millions of us benefit from better prices. But there are pitfalls, warns Amelia Murray
From Tv-ondemand services to car club membership, audiobooks, meal plans and gyms, we’re subscribing in greater numbers to ever more services.
And the amount we spend on subscriptions is also rising. At £56 per month for the average person, it’s an even higher £62 for adults aged between 35 and 54 – suggesting the growing appeal of a vast new range of online subscriptions from news and entertainment to specifically digital services such as data storage for photos and other files.
Some services – such as Netflix, the entertainment channel behind hit series such as House of Cards – make subscription compulsory.
For most consumers, subscriptions are convenient and generally work out far cheaper than repeat, one-off purchases. But subscriptions also give rise to numerous complaints and have been linked to fraud. This was why, in the Budget earlier this year, Philip Hammond announced proposals to introduce greater protection.
The Government has decided to deliver on its controversial energy cap, announced at the same time – see article, right – but so far nothing further has been said about “subscription traps”.
The most common subscription complaints appear to arise where consumers are offered “free” products. Later they discover they are being charged recurrent fees.
The firms are frequently based overseas. Their terms and conditions might include details of future charges, but in many cases the documents are so long and complex that any such details are overlooked or misunderstood.
Telegraph Money reader Janice Clee discovered in July that £175 had been taken from her Barclaycard in two transactions she did not recall authorising. The firms were Premier Age Repair and Maddison Beauty.
She later realised she had given her card details when responding to an online advert offering 30 days’ worth of free supplements for which, she believed, she only had to pay £4.95 postage.
Ms Clee, a widow in her 70s, did not want to take the tablets once she received them – and expected to hear nothing more from the firm.
Soon after the first pills arrived, however, two payments of £89.95 and £84.95 were taken from her account and more products were sent.
She rang the number given on the products and was told that she had not, in fact, requested a free sample, but was sent the products to test. If she didn’t cancel she would be charged and be sent more each month.
Ms Clee posted them back to the company’s address in Holland in an attempt to get her money back but was not offered a refund.
She said: “At no point was I made aware I would be paying for further products. I don’t want them – and as a widow on a fixed income, I can’t afford them.”
Premier Age Repair, which answered on behalf of both brands, told Telegraph Money Ms Clee was not offered free samples but had agreed to a “trial offer”.
As she did not cancel she was charged the full price, and had become a subscriber to an ongoing service.
The firm said the terms and conditions are fully displayed during the order process and shown in full on the page where customers enter their credit information. It said a link to the terms is also provided in the confirmation email. It has since cancelled her subscription, it said.
Barclaycard is continuing to investigate whether her payments can be reversed.
‘People mistakenly believe they are making a oneoff payment’
Problems with ‘continuous payments’
The danger of unwittingly subscribing to a service is linked to confusion over a form of payment called CPA – or “continuous payment authority”.
Martyn James, of online complaints service Resolver, says many people think they are handing over their card details in order to make a single, small payment.
In fact they are entering a CPA, effectively an agreement with a business that allows it to take money from your debit or credit card whenever it thinks it is owed money.
CPAS are used by thousands of legitimate businesses. But they also give room for less scrupulous firms to take cash without consumers realising this is what was technically agreed.
“If you weren’t told there was a cost involved or that you were signing up for a trial that would enrol you into a subscription, you’re not being fully informed,” Mr James said.
He suggested writing to the company laying out your complaint and explaining that you are returning the items.
Make sure to keep hold of the proof of purchase and the proof of return. You can cancel the CPA with your bank.
He said it was worth reporting the incidents to Trading Standards even where the firms appeared to be operating from overseas.
CPAS are different from direct debits where the “direct debit guarantee” ensures consumers are warned of any change in the sum taken.
If a mistake is made, for example if too much money is taken by the company, the bank is liable to pay a refund.