It will soon be easier to cancel subscription services

The words ‘Free Trial’ can almost make anybody sign up to anything, out of curiosity if nothing else.

If it’s free, why not give it a go. I can always cancel if it isn’t right or doesn’t do what I need. And in as little as one or two clicks, you’ve signed up and paid nothing, even if you had to enter your credit card information as a ‘guarantee’.

Then you see the fine print. Cancelling requires six weeks’ notice, or can’t be done online and requires you to phone a call centre – likely one offshore. Or effort to cancel are preceded with more offers such as one more week free, first-month discounts or anything else.

This is what is known as a subscription trap, and they’re now in the crosshairs of the federal government.

Recently, Assistant Minister for Productivity, Competition, Charities and Treasury, Dr Andrew Leigh, announced the Albanese government will introduce draft legislation early next year to ban unfair trading practices that make new subscriptions onerously difficult to cancel. The new rules will also target hidden fees that only appear at the checkout.

Key to the proposed new law will be a prohibition of practices that manipulate consumer decision-making, while specifically targeting subscription traps and hidden fees.

“These reforms will stop unfair trading practices that distort consumer choice and drive-up costs, making markets fairer and giving Australians a fair go,” Dr Leigh said.

“We’re also strengthening consumer guarantees so that when products fail, Australians get the refunds, repairs or replacements they are entitled to.”

The proposed legislation has been universally agreed and supported by the states and territories, with stakeholder consultation to take place early next year prior to a bill being presented to federal parliament.

Businesses which don’t comply will face tough civil penalties and must also indemnify suppliers against the costs of providing remedies, ensuring small businesses aren’t left high and dry for doing the right thing. Regulators will also be granted strong powers to enforce the law.

“I think Australians like their subscriptions, but they also like being in control of them,” Dr Leigh told ABC Radio Canberra this week.

“And too many Australians have had stories of being unable to quit a subscription.

“We’re encouraging other firms to be transparent and upfront with their customers. Don’t set up a kind of Hotel California situation where people can check out, but they can never leave.”