Click to cancel: How hard should it be to end a subscription?

How many clicks should it take to cancel a subscription to a streaming platform, and how easy should it be to get out of a gym membership?

These are the questions to which the Albanese government is formulating a legal answer in response to pleas from consumer advocates calling for stricter rules to crack down on subscription traps. The practice is thought to cost the average Australian consumer as much as $1200 a year.

Here’s everything you need to know about how making customers jump through hoops to unsubscribe has become a proven money winner, and what so-called click-to-cancel rules could look like in Australia.

Subscription traps can be laid by digital-based service providers such as streaming platforms.Credit: iStock

What are subscription traps?

As the name suggests, subscription traps are instances where a customer encounters obstacles to exit a renewing charge.

They can be laid by digital-based service providers such as streaming platforms, news outlets or software apps, as well as for physical objects and bricks and mortar operators such as meal-kit deliveries or gym memberships.

This can include services that require a phone call to cancel, as well as those with an unsubscribe button that is difficult to find on their website, hidden beneath various menus.

Increasingly, businesses are forcing customers to confirm their cancellation multiple times through various screens – a tactic coined “confirmshaming” – in an attempt to retain them, sometimes with guilt-inducing messages or discount offers.

How harmful are subscription traps?

Research is showing that Australians are increasingly struggling to overcome such traps.

Three-quarters of Australians with subscriptions have had a negative experience when trying to cancel, with one in three saying they felt pressured into staying on, according to a survey conducted by the Consumer Policy Research Centre (CPRC) in 2024.

It also found that one in 10 Australians gave up trying to cancel a subscription – meaning they resigned to pay for a product they didn’t want or use.

The true cost is difficult to estimate. Research from ING in 2023 found the average Australian could save an average of $1261 a year by cancelling subscriptions and regular payments they have forgotten about or don’t use, while the CPRC has previously made a more modest calculation of $50 per person per year.

Still, across the Australian population the CPRC estimate adds up to a cost of half- a-billion dollars lost to subscription traps each year.

“Slimy...[but] profitable”

Professor David P. Byrne, deputy head of Melbourne University’s economics department, said subscription traps act as “sludge”, a behavioural economics term for the tactic used by a business or government to make to push a consumer away from a certain action, in contrast to a “nudge”, which makes something easier and pushes them towards an action.

Subscription traps ultimately distort how the market operates, Byrne argues, with less incentive for businesses to have competitive prices, innovate or improve their offerings.

“Above the sheer frustration of having to spend four hours to stop paying for a product you don’t want, in the long run, companies have less incentive to compete if their customers are captive,” Byrne said.

Reputational damage is an obvious risk for a company that frustrates customers with overly burdensome cancellation processes, but ultimately, it might still make business sense, Byrne said.

“A company might make a trade-off to keep your revenue, knowing they’ll get seen as slimy... but the fact that we see sludge in the market suggests it can be worth it. The fact it’s there reveals it’s profitable,” Byrne said.

What would an Australian crackdown look like?

Subscription traps fall into a gap in Australia’s consumer law, said Rosie Thomas, director of campaigns at consumer advocate Choice. “At the moment, the law says you can’t mislead people or act unconscionably, but that’s a high bar,” she said.

However, there is momentum to bring in new laws to stop businesses trapping consumers in payment loops. In the Albanese government’s first term, Treasury began consulting on introducing specific prohibitions on “unfair trading practices”, to plug gaps in the existing consumer law.

In its proposed actions, it has identified subscription traps as one of several “dark patterns” employed by businesses that would be deemed unfair and prohibited. Drip-pricing, where the total cost of a product builds through fees and other unadvertised prices through the online checkout process, are also in the government’s sights.

Last week, Choice, the Consumer Policy Research Centre and other consumer groups wrote to Assistant Treasurer Andrew Leigh calling for “urgent action”. Leigh said the government would move ahead to outlaw subscription traps – but exactly what a ban will look like, and when it will be legislated, is unclear.

How many clicks is fair?

Choice, the Consumer Policy Research Centre and a raft of other consumer groups urged the government to make it “as easy to cancel as it is to sign up”, in wording that will likely have to be interpreted on a business by business case.

That proposed wording closely resembled the phrasing of a Biden-administration push for click-to-cancel rules to make it as easy to terminate as it was to sign up – however these laws were struck down by a US federal appeals court in July, days before coming into effect, due to procedural deficiencies.

Meal kit delivery brands have warned that confidence in subscriber numbers was a key part of their business model and supply chains for perishable food.

The government has said it is studying laws overseas to help draft its local version. In the United Kingdom, businesses must make it “straightforward” and “without having to take any steps which are not reasonably necessary” to end a subscription, as part of recent reforms which also require a 14-day cooling-off period for subscriptions that renew after a free trial period or on an annual basis.

However, there has been vocal pushback against overly stringent click-to-cancel rules in Australia.

The Digital Industry Group, in its submission to Treasury, made the case that businesses should still be able to make discount offers before confirming a cancellation. It also warned that by making cancelling too easy, consumers might “seek to game subscriptions” by terminating and re-signing up purely to take advantage of offers aimed at new customers.

Meanwhile, Hello Fresh, Marley Spoon and other meal kit delivery brands have warned that confidence in subscriber numbers is a key part of their business model and supply chains for perishable food.

Ultimately, unfair trading prohibitions on subscription traps will have to balance consumer rights, business interests and existing laws. While signing up to a subscription can be increasingly fast due to autofill functions and saved payment details on electronic devices, one-click cancellations could be legally problematic, the Australian Chamber of Commerce and Industry (ACCI) warned the government.

“As the subscription is a formal contract, the subscriber may need to provide more information than simply clicking ‘unsubscribe’ at the bottom of a message,” the ACCI said.

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