Business groups have been pushing back against efforts to institute a 'one-click rule' that specifies that it needs to be as easy for customers to cancel their subscriptions and memberships as it is to sign up in the first place.simpson33/iStockPhoto / Getty Images
Vass Bednar is a contributing columnist for The Globe and Mail and host of the new podcast, Lately. She is the executive director of McMaster University’s master of public policy program and co-author of the book The Big Fix: How Companies Capture Markets and Harm Canadians.
More and more of our interactions with companies don’t involve owning anything they produce, but rather “renting” goods and services through a subscription – creating annual recurring revenue. They’re starting to overwhelm us: surveys are showing that Canadians are struggling to manage recurring expenses that accumulate over time.
In the United States, the FTC recently introduced a “one-click rule,” specifying that it needs to be as easy for customers to cancel their subscriptions and memberships as it is to sign up in the first place (this is also referred to as the “click-to-cancel”). After the proposed rule was announced in March, 2023, over 16,000 comments from the public bolstered it.
This straightforward principle has already come under fire from business groups (including Disney), who are pushing back – hard. That aggression is surreal because the legislation doesn’t say that subscriptions shouldn’t exist, but instead simply takes the stance that they should be far less sticky. But companies don’t want us to be able to exit this perpetual payment pitfall.
The modern subscription trap is threefold: firstly, locking you into recurring annual or monthly payments (typically through deceptive practices); secondly, often intentionally making it unnecessarily onerous to exit that agreement; and thirdly, they can be a vehicle to inadvertently surrender other unrelated rights. Recall that Disney tried to make the claim that a subscription to Disney+ absolved the company from the damages associated with a fatal accident at their theme park or that a couple was unable to sue Uber after a serious car accident because they agreed to binding arbitration in Uber’s terms of service when they ordered takeout on UberEats.
Companies are obviously threatened that this lazy revenue model is being scrutinised by regulators. It’s worth asking how we even got here in the first place. Initially, the idea of paying incrementally to access expensive goods seemed quite promising. Subscriptions were touted as “the future of commerce,” and we were told that consumers preferred the advantages of access over the hassles of maintenance.
That model was presented with tons of possibility, surging in 2012 with subscription boxes offering razors, meal kits, and underwear. And similar concepts like car-sharing and community tool libraries have helped many people access important items and save money in the process. But there’s been a serious shift over the past decade away from outright ownership and towards perpetual, eternal micropayments where we will, as author Carol Roth has cautioned, “own nothing.”
It really seems like companies are working hard to get a recurring claw into your wallet. And the value exchange is often ridiculous, if not an entirely out-of-control cash grab. In June of this year, the “smart” bassinet company Happiest Baby started to charge sleep-deprived parents $20/month for features that were previously included with their SNOO Smart Sleeper bassinet. The MyQ Tesla integration charges $45/year to open your garage door and most software programs like Adobe Photoshop or AutoCad don’t allow you to own the latest model, instead forcing you to pay monthly.
Rocket Money offers a subscription to track your subscriptions. Humiliatingly, my printer at home holds me hostage to a subscription, too – we have to use HPs much-derided Instant Ink program. Occasionally, the subscription model stretches the imagination, like when BMW scrapped plans to charge car owners $18/month for heated seats or Whirlpool’s Swash detergent subscription, which optimizes for … soap use.
Here in Canada, provincial consumer protection agencies could work with the Competition Bureau to ensure that people can unenroll from these schemes more easily. For instance, in Ontario, a recent update to the Consumer Protection Act stipulates that if a business has represented its goods or services in a false, misleading, or deceptive way, you can get a full refund if you withdraw from the contract within one year.
It’s clear we are suffering from subscription fatigue. But that exhaustion may be preventing us from going beyond just shrugging off the rapacious, unwanted coils of a subscription and asking bigger questions about the trick itself, like: do we need a right to a one-time payment that protects the ability to outright own a version of a software system, like we used to when we bought it off a shelf and downloaded it through CD-ROMs or a floppy disk? When are these charges just a straight-up scam? And what is the line between an efficient business model and one that is straight-up exploitative?