Latest news with #subscriptiontraps
RNZ News
22-07-2025
- Business
- RNZ News
Westpac warns of multi-million-dollar 'subscription trap'
Customers often only realise what is happening when they see the recurring fee from a credit card account. File photo. Photo: 123RF New Zealanders are losing millions of dollars a year to "subscription traps", one bank says. Westpac said it had helped to stop more than $25m in unwanted charges being processed on to the cards of unwitting customers. Westpac NZ head of customer care operations Peter Barnes said many overseas-based websites were selling goods and services that hooked customers into recurring subscription payments. The bank implemented a block in April 2024 and had stopped 20,000 customers from making these sorts of payments within the past three months. Barnes said the block was implemented after a spike in customer complaints and feedback on overseas subscriptions. Many were businesses based in Europe and the UK, he said. Barnes said it would only apply to businesses who misled customers and then made it extremely difficult to cancel recurring payments. "These types of businesses aren't necessarily acting fraudulently, because they do disclose the subscription details in their fine print, but typically they don't offer this information up front," Barnes said. "It's not normally until the following month or two when [the customer] sees the recurring fee from a credit card account that they actually twig that something's not quite right." He said it was an unethical way of making money but was seen in everything from gift boxes, shoes, clothing and accessories to sportswear and digital content. "This is not just a case of someone signing up for a free trial and forgetting to cancel before the subscription kicks in. Typically, once someone has made a purchase through a merchant like this, they only realise they have signed up to a subscription when they see further charges on their credit card. "When they contact the merchant to dispute the transaction, it can often be difficult and time-consuming to cancel the subscription, and sometimes the merchant may be completely uncontactable. Customers may eventually resort to cancelling their credit card to stop the payments, which can be disruptive and inconvenient. "Blocking these types of payments is another way we can help protect customers, on top of initiatives like rolling out a confirmation of payee service and enhancing our fraud monitoring systems with biometric technology." He said a block would also stop customers' details being made available to unscrupulous third parties online. Westpac was working with other banks on the problem. "While this payment block has been working well so far, we encourage New Zealanders to be careful when transacting online, including reading the fine print when making purchases. "If something doesn't look or feel right, take a step back and check whether the payment you're making is legitimate." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
WIRED
09-07-2025
- Business
- WIRED
The ‘Click-to-Cancel' Rule Was Killed, but Consumer Advocates Could Revive It
A US court scrapped a rule requiring a simple method for canceling recurring payments. Experts are hopeful regulators will revisit the issue and ease consumers' rage over 'subscription traps.' Photo-Illustration:United States residents almost escaped subscription cancellation hell, but the Federal Trade Commission's 'Click to Cancel' rule was unanimously struck down by the US Court of Appeals for the Eighth Circuit on Tuesday—just days before it was set to go into effect. What would have happened if this updated FTC rule had gone into effect on July 14 as planned? 'The stated goal was that they wanted to make it as easy for you to cancel a subscription as it is to sign up,' says John Breyault, vice president of public policy, telecommunications, and fraud at the National Consumers League. How reasonable! It's the type of rule that sounds like it should already exist as part of baseline consumer protections. If I can sign up for a gym membership or a news website subscription or a food delivery service with just a few, seamless taps on my smartphone, then why am I so often thrown into a labyrinth of puzzles—with people to call or in-person locations to visit—whenever I want to opt out from one of the recurring subscription charges. Even services that do allow users to cancel online may include more steps than the sign-up process or introduce confusingly labeled buttons that slow down the process. The Eighth Circuit's decision to nix the 'Click to Cancel' rule was based on procedural complaints, not on the substance of what the consumer protections entailed. 'While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission's rulemaking process are fatal here,' reads the appeal court's published opinion. John Davisson, director of litigation at the Electronic Privacy Information Center, sees this decision as 'very poorly reasoned' and hopes the current FTC tries to revisit the rule to protect consumers better. 'It would be such a slam dunk for the commission,' says Davisson. 'I think everyone understands why the subscription traps are bad. No one without a financial incentive or career advancement motive to sustain these subscription traps thinks they should exist.' A broad base of support from individual consumers for streamlining the opt out process could help eventually revive the 'Click to Cancel' rule or similar consumer protections. 'I'm somewhat hopeful, given the public support for this important option of canceling, that the commission will go back and get this thing re-going again,' says Bill Baer, a visiting fellow at the Brookings Institution and former member of the FTC. 'It'll take some time, but it's an important benefit to consumers.' If the current FTC decides to try again, which it may not, the process would likely take months or even years to complete. 'It's unfortunate the FTC's rule won't be enforced,' says Mario Trujillo, a staff attorney at the Electronic Frontier Foundation. 'But, the opinion doesn't stop states from acting, Congress from acting, or even the FTC from bringing individual cases.' States-level rules already have started to step in with more consumer protections than what's currently offered at the federal level and won't be impacted by the court's recent decision. For example, California's own version of 'Click to Cancel' went into effect last year and remains intact. Like many Americans, I'm seeing more and more of my paycheck go to subscription services each month. While some of the services are essential, others are less so. But, the hassle of going through the opt out process to cancel these unwanted services is often so tedious that I've put it off in the past—until I see the $20 recurring charge again the next month and get frustrated with myself. While deep-pocketed business interests will likely try to block any future attempts to mandate a simplified cancellation process, a deep-set hunger for change from consumers, fueled in part by righteous indignation, may eventually prevail. 'I think, on balance, it is something worth doing that can be done with modest cost to the business community and a hell of a lot of benefit to the consumer community,' says Baer.
RNZ News
10-06-2025
- Business
- RNZ News
Australia: Watchdog takes dating site to court
Australia correspondent Chris Niesche looks at why the Australian Competition and Consumer Commission has taken e-Harmony to court over subscription traps. He'll also detail comments by Australia's defence chief about the country's preparedness for war and look at reaction to former PM Scott Morrison's King's Birthday Honour. Tags: To embed this content on your own webpage, cut and paste the following: See terms of use.
