Started a new year health kick? Beware the ‘subscription trap’

If you’ve started the new year by signing up to a new you, beware of dodgy business practices that can lock you into services that take more steps to cancel than your daily walking goal.

That’s the message from Financial Services Minister Stephen Jones, who has put gyms, streaming services and meal-kit providers in particular on notice as the government prepares to crack down on companies trapping people in ongoing subscription payments.

Financial Services Minister Stephen Jones says some subscriptions are easy to sign up to but almost impossible to get out of.Credit: AFR

“As Australians come out of Christmas and into the new year, lots of us are making New Year’s resolutions to get fit, to eat better, to learn a new language, to ensure that we’re going to expand our minds,” he said on Friday.

“Unfortunately, we’re seeing subscription traps in particular, where it’s really easy to sign up, but almost impossible to get out. They’ve got to go online, they’ve got to ring a call centre which is never open.”

Jones, who is yet to reveal how the regulatory changes might work, said the government hoped to release draft legislation to ban unfair trading practices – some of which don’t now breach consumer law, but which harm customers – in the first few months of the year, but wanted to ensure the government got it right.

“If we can’t get it done before the election, it’s certainly a high priority for an Albanese Labor government after the election,” he said.

A study by the Consumer Policy Research Centre last year found three-quarters of Australians with subscriptions had some negative experience when trying to cancel them, with one in three feeling pressured to keep a subscription.

University of NSW Associate Professor Katharine Kemp said some subscription traps already fell foul of Australian Consumer Law and could be investigated by the Australian Competition and Consumer Commission (ACCC).

In 2023, the consumer watchdog sued dating site eHarmony, alleging it made misleading statements about the pricing, renewal and duration of its memberships, including failing to clearly disclose the automatic renewal of its subscriptions.

However, Kemp said some subscription traps sat outside existing consumer law and that there should be a prohibition on unfair trading practices as advocated by the ACCC in 2023. These include conduct that might not mislead or deceive, but which creates confusion or omits relevant information.

Common examples of unfair trading practices outlined in the government’s consultation paper made public in November include subscriptions that silently renew or automatically roll over from a free trial to a paid subscription, and warnings that create a false sense of scarcity by claiming a small number of items are left despite stock being available elsewhere.

The government is also looking to ban dynamic pricing – often used in concert ticket sales – where the price is pushed up as more people try to make a purchase, and drip-pricing (common on flight or hotel bookings) where fees are added during the transaction process.

AUSActive, Australia’s peak body for the exercise and active health sector, was contacted for comment.

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