When Vanessa Bowen, a financial coach in Mississauga, Ontario, sat down with a client last year to learn about the woman’s finances, the pair realized something was amiss: Spotify’s monthly fee It seemed to appear out of nowhere.
Does she know she’s paying for a music streaming app? No, because she doesn’t use it. Did the company bill her incorrectly somehow? Probably not, Bowen told her. Then the woman remembered.
“She was like, ‘Oh my god, I’ve been paying for my ex-boyfriend’s Spotify!'” recalls Bowen. “She’s spending all this money on someone who’s not even in her life anymore.”
Canadians are signing up for subscriptions, and companies are happy to help. It’s quick and easy for buyers, and it’s a steady cash flow for businesses with regular auto-renewing subscriptions. But some simply forgot they were signed up — and the bills started piling up.
“Maybe we use it for a few weeks, but then we forget about it,” Bowen said. “Life is blocked…but the charge is still affecting our credit cards, it’s still affecting our financial situation.”
CBC News spoke to experts who share how to keep those subscription fees in check — and what to do when you can’t find the unsubscribe button.
“A fundamental shift in the way companies do business”
Anyone who subscribes to a newspaper can tell you that this model has been around for a long time.
But according to the authors of Toronto Scriberbase and Subscription craze.
Now, this is a fact of life everywhere. Sure, you might have Netflix or Disney Plus, but you can also get monthly mystery boxes filled with cosmetics, or exotic flavored teas and coffees, or meal kits with pre-measured ingredients — down to the teaspoon.
“In the past 10 years, more and more companies have moved in this direction, not only e-commerce companies, but also platform companies, software companies and service companies,” Levinter said.
UBS Financial Services predicts the global subscription market will grow to $1.5 trillion by 2025, more than double its estimated value in 2021 of $650 billion.
WATCH | People are unsubscribing:
A third of Canadians have canceled their streaming service subscriptions in the past six months, according to a survey by the Angus Reid Institute.
“It’s a major fundamental shift in the way companies do business. At the same time, it’s a fundamental shift in the way consumers interact with companies.”
Businesses are more interested than ever in building long-term relationships with the consumers who buy their products. While it used to be up to companies to drive repeat business from customers, the emphasis on subscriptions has changed that.
“In the subscription business, the responsibility is now shifted to the customer, so the company assumes the customer is otherwise satisfied with the product or service and will continue to bill that customer in perpetuity unless the customer decides to cancel,” Levant said.
Bowen, who runs a financial training company called Mintworthy Co., said the problem is that people are rarely willing to drop their subscriptions. More than 85% of Canadians subscribe at least once a month, says Angus Reid poll Discovered from October.
But the same survey showed a third of Canadians had canceled their subscriptions in the past six months, with half citing the ongoing cost-of-living crisis. Those hanging on the sub may have a hard time talking that long, Bowen said.
“Once you’ve subscribed to your life, even if you’re not using it consistently, your mindset becomes ‘Well, maybe I’m going to need it next month or next week,'” says Bowen.
“Once you have it, it’s hard to say goodbye.”
longer farewell
Saying goodbye can be especially tough when companies want to say goodbye: the dreaded “subscription trap.” A Vancouver woman told CBC Cost of living She was forced to cancel her credit card last year after a company made it extremely difficult to opt out of her subscription.
“It would help if subscription contracts and time intervals were more standardized,” Kenneth Whitehurst, executive director of the nonprofit Consumer Council of Canada, said in an email to CBC News.
living cost26:06Subscription pitfalls, sending money overseas – who will make up Canada’s future workforce?
The U.S. is cracking down on companies that make customers turn their hands over to cancel subscriptions — but consumer advocates say Canada is falling behind. Plus, we’ll let you know if sending money overseas has really gotten cheaper. We also explore Canada’s options for filling labor shortages as immigration rates continue to rise and birth rates continue to fall. Are temporary foreign workers the solution or do we need something more permanent?
Whether it’s easy to unsubscribe is a matter of opinion, and is often related to how user-friendly the site is, he added. The commission hasn’t received many complaints about online subscriptions, but “I think the concern is that they are unknowingly authorizing term agreements for recurring payments.”
“Overall, there needs to be clearer cancellation rules for small, recurring subscriptions.”
A Canadian company pleaded guilty last year to luring buyers into monthly subscriptions to health and dietary supplements and was fined $15 million following an investigation by the Competition Bureau. But because Canada’s consumer market is much smaller, the bureau’s regulator is not equivalent to the stricter FTC in the United States, Levant said.
Horror stories lead US federal watchdog ramp up It took enforcement steps in 2021 after several high-profile companies — from SiriusXM radio to Apple Inc. — faced lawsuits from customers who said the businesses made subscriptions too difficult to cancel or engaged in questionable auto-renewal practices.
That’s why it’s critical for companies to make it easy for customers to ask them questions and concerns, and give them control over their subscription packages, Levinter added.
“If you make it difficult for customers to do that, you end up in a lot of trouble,” he said.
“A dark circle under the businessman’s eye”
Cutting off your credit card is a desperate measure. But most Canadians will have an easier route to deal with unwanted subscription fees: They can ask their credit card company for a chargeback, in which the bank transfers the money from the merchant’s account back to the customer.
“Chargebacks are a black eye for merchants,” Levant said.
For example, businesses that accept Visa or MasterCard have a responsibility to keep chargebacks below certain thresholds. If chargebacks spike, that’s bad news for the company.
“You can shut down your card processing, which means as a company, you can no longer process Visa or Mastercard transactions, and if you don’t have the ability to process transactions, you have no business.”
If you’re using a debit card to make a purchase, the process is a bit murky, as companies won’t be able to protect you if you share your PIN or somehow encourage unauthorized use.
Maybe you just want to cut back for your wallet. If so, Bowen says, keeping track of your monthly expenses — double-checking your credit card statement for misplaced Spotify charges — is the best way to catch money slipping through the cracks.
There’s also been a slew of subscription management apps in recent years, from MySubscribe to Mint to Bobby.
But auto-renewing subscriptions are a two-way street.
“I think companies should have [the] It’s the responsibility of reminding consumers, “Hey, your subscription is coming up, do you want to cancel?” and having an easy way to hit that cancel button so we can say ‘thank you and see you later,'” Bowen said. “It’s fine, but I’m going to spend my money on other things now.