When Democratic Rep. Bob Freeman of Tennessee went through his cable and internet bill last year, he kept seeing recurring charges for app subscriptions he didn’t recognize. It turned out his 14-year-old daughter had signed up for subscriptions at introductory prices and never canceled when they switched to full price.
“I questioned her bills and she said, ‘Oh, it’s only $1.99.’ They were bait and switch,” he said in an interview. To actually cancel, he had to send an email to the company and then make a phone call where the company representative tried to talk him out of it.
“It was clear that it was not intended for convenience. … It was clear that it was intended to be predatory,” he said.
That experience, along with dealing with his grandmother – who subscribed to apps for $2.99 a month and then renewed them for $14 without her knowledge – convinced him that a modern law was needed to provide more transparency and consumer protection.
Freeman introduced a bill that would require companies to provide longer notice periods for automatic renewal of subscriptions.
Originally, his bill would have required companies to obtain another “yes” from customers – “explicit consent”, in legislative jargon – before consumers’ credit or debit cards are charged. But after forceful objections from cable and streaming services, Freeman said, the bill was changed to eliminate this requirement.
“They are completely out of sorts,” he said of the industry.
In April, Tennessee Republican Governor Bill Lee signed the legislationThe state law now requires companies to “clearly and conspicuously notify” consumers when automatic renewal occurs more than 60 days after initial sign-up and requires them to clearly communicate when they will begin charging for the service.
About a half-dozen other states have passed similar laws this year, and companies that rely on subscriptions say some of the stricter measures only serve to anger and confuse consumers.
Navdeep Sahni, an associate professor of marketing at the Stanford Graduate School of Business, said giving consumers more information about automatic renewals and cancellation options is good for business. He said it means consumers are more open to trying modern things and “not being tricked into buying something they don’t want.”
According to Sahni, companies only harm themselves when customers feel disappointed by the experience.
But earlier this year, Michael Powell, president and CEO of NCTA – The Internet & Television Association – warned at a Federal Trade Commission hearing on a proposed federal rule that many customers may misunderstand the “click-to-cancel” measures. A customer “could face difficulties and unintended consequences if they only want to cancel one service in the bundle,” Powell said, because “cancelling part of a discounted package can increase the price of the remaining services.”
Powell added that “three-quarters of cable and broadband customers who called to cancel ended up retaining some or all of their service after speaking to an agent.”
In an email to Stateline, association spokesman Brian Dietz said the organization would not comment further on the proposed federal rule or similar state legislation.
It was clear that it was not intended for convenience. … It was clear that it was intended to be predatory.
– Bob Freeman, Democratic Representative from Tennessee
In Virginia modern lawwhich came into force in July, requires companies to inform consumers of their right to terminate their contract within 30 days of the end of the trial period. Minnesota The measure, which comes into force on January 1, requires companies to give their customers the opportunity to cancel using a “simple mechanism” such as a checkbox or submit button.
And a The invoice sent to California’s Democratic Governor Gavin Newsom would tighten an already strict automatic extension LawBrandon Richards, Newsom’s spokesman, said the governor has until Sept. 30 to sign or veto the bill.
The laws are intended to support people become more aware of what they are signing up for. In a March Opinion poll According to a study by consumer website CNET, 48% of respondents said they signed up for a free trial of a paid subscription and then forgot to cancel it.
“I am sure that people often simply do not get around to [canceling] it,” said Steve Baker, a lawyer and former regional director of the Federal Trade Commission. “And they make it demanding to quit. It’s not necessarily something you file a complaint about. It’s more of a minor annoyance.”
Freeman, the Tennessee congressman, said companies with good products should not fear the modern rules. “If you have a good product, when the tempting price expires, [I can subscribe]”, he said.
Like Freeman, Republican Sen. Todd Weiler of Utah, who sponsored the automatic renewal bill in his state, was motivated by personal experience. Weiler said he makes a point to note the date when a discounted or free offer expires and full fees become due.
“I consider myself a smart person,” he said. “It’s usually easier to find the cancellation information when you log in, so I go there and put it in my calendar. I try to be conscientious. But sometimes I still get caught.”
