‘Failure to review subscription auto-renewal processes could lead to legal ramifications’

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This article is brought to you by Retail Technology Review: ‘Failure to review subscription auto-renewal processes could lead to legal ramifications’.

Retailers should proactively review their subscription auto-renewal processes to make sure that they are protecting customers and aligning with new government guidelines. Failure to do so could not only put customers at risk of financial harm but could also lead to legal ramifications.
  
That’s the message from digital retail specialists Sherwen Studios who have outlined five practical steps for retailers to use as an alternative to auto-renewals in their latest white paper, titled ‘The future of subscription commerce is up for renewal’.

The publication of Sherwen Studios’ report has coincided with the UK government releasing new information relating to the Digital Markets, Competition and Consumers (DMCC) Bill. 
  
Under the proposed terms of the bill, the Competition and Market Authority will be given new powers to deal with issues such as subscription traps, fake reviews and pressure selling. Not only will the CMA be able to decide if or when consumer law is broken, but they will also have the power to fine businesses up to 10% of their global turnover. 
  
So-called subscription traps have long been a serious issue for consumers, with Citizens Advice indicating in December 2022 that “half a billion pounds has been spent on subscriptions that auto-renewed without people realising in the last year.”
  
Sherwen Studios are advocating for retailers to pay closer attention to the issues surrounding cancellations when it comes to subscription commerce. As part of their white paper, the firm worked with research data and analytics group YouGov* to survey more than 2,000 adults about their thoughts and opinions relating to subscription commerce.
  
They discovered that

  • Over a third (34%) of current subscribers plan to cancel at least one subscription in the next twelve months.
  • 20% of current subscribers openly admit that they plan to cancel their subscription when they get to the end of an introductory discounted rate.  
  • Four in ten UK adults (with and without a current subscription box) believe that easy refunds are an essential feature for any subscription plan.
  • 25% UK adults want some form of direct customer service link to help resolve issues. 

Sherwen Studio’s research has confirmed that those who have signed up for a subscription commerce plan have clear expectations on how they want to manage their subscriptions. Quick and easy cancellations are an essential part of any successful subscription strategy. 
  
Sherwen Studios believe that retailers should take proactive steps to assess any auto-renewal processes to identify if there are any clear barriers that could prevent a customer from easily cancelling their subscriptions. Failure to do so not only mean that subscription strategies are not meeting customer expectations but could lead to long-term reputational damage as well as the risk of falling foul of the latest government guidance.

Matt Sherwen, owner of Sherwen Studios says: “In an ideal world, auto-renewals should be a way to seamlessly continue a subscription for happy and engaged customers. But if a customer does want to cancel, seamless processes should be in place that make it as easy as possible for that subscriber to pause or cancel their subscription. Failure to pay attention to this could not only lead to huge reputation damage but there could soon be serious legal ramifications. 

“Our own research has identified exactly what customer expect from subscriptions, and accessible technology is there to make it easy for retailers to seamlessly match those expectations. We are urging retailers to periodically check their technology to ensure that it is working as it should, and to confirm that customers are not being adversely affected by auto-renewal processes that make it difficult to cancel a subscription.”

Five practical steps to avoid auto-renewals

Sherwen Studios have outlined five practical steps that retailers can take to protect themselves and their customers when it comes to subscription auto-renewals. 

  • Use digital marketing techniques to remind customers when a free trial or introductory discount period is due to end.
  • Enable customers to set up time-specific cancellations during the initial application – therefore, choosing their cancellation date from the outset. 
  • Implement single-click cancellations, followed by a confirmation email, to prevent accidental cancellations. 
  • Use push notifications to alert customers to upcoming deadlines (such as edit/cancellation periods)
  • Integrate subscription commerce platforms with customer service contact centres. If a customer has a complaint or an issue with their subscription, the information is readily available to the customer service agent at the touch of a button. 

Sherwen concludes: “These practical steps rely on using technology in the right way. Everything is about focusing on customer service and finding the easiest solutions for customers to self-manage their subscriptions. We believe if cancellations are handled right, there’s more chance of a lapsed subscriber returning to you. However, with so much focus on complicated cancellations, retailers need to start proactively checking their systems now to protect themselves, and their customers in the future.”

*All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2021 adults, of which 251 were current customers of subscription boxes. Fieldwork was undertaken between 30th November - 1st December 2022. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).

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