Why Retailers Like It When You Subscribe
You know what's great about subscriptions? You forget to cancel them. You also pay more over time than you would if you were forced to buy items individually. Yeah, that's awesome—for companies. The New York Times looks at current research on how consumers think about subscriptions, and why companies want to push them more than ever.
"Looking at Life as One Big Subscription" [New York Times]
(Photo: Dominic)
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This is one area where the MMORPG market has things right. All of the games that I've done free trials for NONE have ever asked for a CC# as part of the trial. They remind you when the trial expires, but that's about it. Every now and then you might get some newsletter email touting the new expansion or feature, but they generally are pretty nice about the whole trial account thing.
The latest craze seems to be automatic subscription renewals.
I had a magazine and a newspaper where they automatically resubscribed me. They each sent a "courtesy notice" which I could return to cancel, then after that I was on the hook for new issues. (I'm sure there was something in the original subscription agreement that allowed them to do this to me.) For the magazine I sent back the first invoice marked "please cancel" (after I had gotten a couple of the issues under the resubscription) and I never got another bill. I did the same or the newspaper and they sent me a bill for a few bucks for the copies they had already delivered.
I've always hated that most subscriptions automatically renew by default. If they're nice they might send you an email a couple weeks before it lapses, which you promptly forget about and end up with another year's subscription. I've only seen this not happen one time. The people behind the Grocery Game canceled my subscription because I apparently hadn't logged in for some time (which I hadn't) and figured I didn't want it anymore. It wasn't exactly an onerous subscription fee (like $10 every other month), and I think I only found out about it because I was logging in to cancel my subscription, but I thought that was very conscientious of them.
Is this bad for consumers? If so then why does Consumer Reports do this exact same thing?
I once had a subscription for a newpaper to be delivered to my apartment every morning. It was a full subscription, seven days a week. The problem was, about 40% of the papers were not delivered. That's when I found out from neighbors in the same building (when I was trying to probe them to see if someone was stealing my paper) that they ALL were not getting a paper on the very same day as I wasn't.
Yet they were very good at making sure I received my bill for the newspaper, and billed as if I received 100% of them.
I did call in to complain about the failed delivery several times. They said the problem must be due to the company they hired to deliver in the area I lived in. They said they'd get it fixed. It never got fixed.
So I finally told them to cancel the subscription ... which I had ordered directly from them in the first place. But they told me I needed to contact the delivery company (which, BTW, NEVER answered their phone). Yet I was being billed directly by the newspaper.
So I sent in the statement with big words "CANCEL" written across. I didn't send in ANY more payments. Yet they kept billing me, and kept delivering SOME of the papers (I would have resumed payment if they managed to even deliver papers 7 days in a row).
Eventually, they started sending threating letters. Then they sent me a notice that my subscription was now canceled (amazingly, the few papers I was getting up to that point just stopped). And they sent the bill to a debt collector.
I called the debt collector once and told them the story and told them I would not pay the bill because I had been paying in full for 4 months when only 60% of the papers arrived, and I was not going to pay any more because I canceled. The lady at the collection agency agreed that this was a problem, and she did manage to stop the collection letters (they never got to the point of calling me).
About a year and a half later, I had moved out of state, and via my forwarded mail, received a new bill from the newspaper. On the bill was the originally accumulated amount they thought I owed, followed by a "charge off credit" for the same exact amount, and a balance of ZERO. Below that was a statement that because my account was now in good standing, my delivery would not be resumed.
That was one of the funniest things I had ever seen, especially since I had moved 2 states away.
The newspaper in question is "The New York Times".
I have canceled almost all my subscriptions either because 1)they begin sending renewal notices almost immediately after you subscribe or 2)many (including Consumer Reports) have added an extra "shipping and handling" charge in the fine print.
@Donathius: but they also go on the drug dealer model - give a little bit away for free, jsut enough to get them hooked... then they'll come crawling back for more
@gStein: They're letting you try a product before you buy it. Way to try and make it sound like a bad thing by associating it with something negative.
@sir_pantsalot: I don't see anything that says that it's necessarily bad for consumers. But it's definitely good for the businesses.
@Skaperen: I had the same prob with Investor's Business Daily. Not once could they manage to get me 5 papers in a row delivered. I canceled after about 3 months. Now I just buy it every now and then (maybe twice a month, instead of *daily* if they could have gotten their act together).
@Foolslayer: A shipping & handling charge for a magazine? Wow! That is very weird. I guess they all figure if the airlines & delivery companies can charge a la carte, then so can they. What's next for magazines? A fuel surcharge? I will be reviewing my BusinessWeek subscription renewal form when it arrives again.
Thank you for that tidbit.
@sir_pantsalot: Bingo! Exactly why I canceled my CR subscription. The customer service rep said they do this "for my convenience" but I told her it was not convenient in my case. It's just one more damn thing you have to remember to cancel if you find yourself say... being deployed to the Middle East for an unknown period of time.
Just my opinion but companies who force people into these deals suck.
pretty necessary in some business models. i can't remember ever getting "caught" in a subscription. seems like only stupid people buying girls gone wild and wrinkle cream on TV are the suckers. Here in Seattle amazon has an amazon-fresh program where they deliver food to your home with optional subscription! never having to shop for essentials again!?!?!? its perfect
@Foolslayer: Are you outside of the contiguous U.S., by any chance? Or did you subscribe through a service? If neither of those things are true, then that is indeed really weird. I'm not seeing a s&h here ([ec.consumerreports.org]) but your point is that it's not necessarily out in the open, I guess.
@sir_pantsalot: They do?
Kudos to pointing it out here. I'm curious what the reaction is going to be.
@Foolslayer: The constant renewal offers are a real nuisance. Once they've got you in their hooks they never want to let go. Assholes should realize that customers are loyal when they're treated well, not badgered. Apparently they don't believe that their product, with maybe an occasional renewal offer, is good enough to bring repeat business.
@floraposte: I've canceled a number of magazines for this hidden delivery charge too. I live in Alabama, which granted, is only marginally in the US, but still...
The worst is when you sign up under a special rate- and then the automatic renewal is the normal twice as expensive rate.
If you want to continue with a subscription, keep this in mind and bargain with them. One year (10 issues) of Men's health costs 20+5 shipping. I was able to talk them to 2 years at 30 shipped. 8)
@frank64: We get Wired magazine and we got a year for free because of some soda gimmick and we liked the magazine so we decided to renew, but only when it was around $12 or less. Usually, if you wait until the last minute to renew or even miss one issue, they'll give you a cut rate deal. THEN take them up on the offer.
I've subscribed to a few magazines after finding that I normally buy them on the newstand anyway. The subscription for a year is usually equal to about 3 issues bought at the store. At least for magazines, it's been a fair deal for me.
@runchadrun: I love the two magazines that I never subscribed to before that sent me notices saying that my subscription was automatically renewed and that I owed almost $100 for the two subscriptions...
@Tiber: no, the drug dealer comparison is pretty accurate on just how addictive some of the MMOs really are
@Donathius:thats cause the gamer market is likely younger and saavy that subscription=ripoff/hassle to cancel. Or too young to own a CC, so they sign up then get mom or dad...
@yospiff:
Other than the annoying renewal letters, I've saved a lot of money by getting my mags by subscription.
@Donathius: If I recall correctly, I believe WoW requests a credit card to cut down on the rampant scamming, spamming, and general jackassery. However, they don't charge you.
@gStein: Did this person really have their comment censored for pointing out proper apostrophe usage?
@Donathius: WoW requires one, as does Aion. I have three WoW accounts (Recruit A Friend easy levelling ftw), two I switched to inactive the moment the bonus was over.
@diasdiem:
Wow, your experience with The Grocery Game is far different than mine. I took a 30 days trial of their service, which I did not find helpful to me. I cancelled in writing 20 days in and had the e-mails to prove it.
Well, they charged my credit card a $30 monthly membership fee anyway (must have been on a different level than you) and did not respond to my request for a credit so I did a chargeback on my MasterCard.
The suckers FOUGHT THE CHARGEBACK which is really brazen since I had proved I cancelled. It rare a merchant will try and fight one of those when you prove they are wrong.
It took two more letters to my credit card, but I won and Grocery Game lost the $30 they tried to pry out of my hands. I really was turned off by that. To not cancel me and charge me in error was one thing, to fight me for the $30 when I proved they were wrong left a really bad impression.
This is a basic personal finance management issue. If you sign up for a free trial of something you need to be on top of things enough to CANCEL before the trial is over or FIGHT any credit card charge that is not correct.
These companies count on you not cancelling or not bothering to fight unauthorized membership charges.. don't let them win!
@Foolslayer: Wow. That really is news to me. I only have one minor print subscription (aside from my own journal, which doesn't have anything like that), so I'm definitely not up on the latest.
Any time a company requires a subscription to signup (think freecreditreport), I always immediately cancel after signing up. This way I don't have the opportunity to forget.
I make sure to call and cancel as well as send an email to customer service requesting cancellation. This way, if CS "forgets" to cancel, I have email proof that I cancelled the service within the cancellation period.
@billf: @PLATTWORX: Yeah I put it on my calendar now a day early right when I sign up, that usually helps.
I'll admit I got caught with an audible.com subscription and forgot to cancel...that was like $30, kind of annoying, but totally my fault. Didn't bother arguing about "not using it" to the CSR.
@robodomo: Give that argument a rest. There's a HUGE difference between something that makes your brain chemically dependent on it and a time waster that some people get too attached to.
I think the "RIGHT" way to handle subscriptions is to always require that subscribers to have to OPT-IN each and every year (rather than staying opted in from year to year automatically). When a company offers a "free trial", after it has expired, they should have to wait for the customer to let them know they want you to continue. And if the customer doesn't contact them and authorize it after the free trial has ended, the company should not be authorized to charge their account.
So many people just simply forget about the 'free trial' and let it charge their card. Then maybe they notice it, maybe they don't. And maybe the real reason the company didn't hear back from them is because they WEREN'T interested anymore.
Sure, I think this would probably screw up a lot of company business plans. But in the end, is this a fair business practice to engage in?
Mind you, I think the world of you folks at the Consumerist. But recently, even you ran a 'free trial' offer for Consumer Reports that followed this common practice. To be honest, of all companies out there, I am surprised that you would still be using this "we'll charge you after your free trial is up unless you let us know not to charge you" practice.
With all of the consumer protection reforms that are being considered, I think this practice in particular should be outlawed. Let me sign up for a free trial, and at the end of it, contact me and ask me if I want to continue. But don't just automatically charge my card and make assumptions about my continued interest.
@Shoelace: I actually dropped the only subscription I had because they started sending the renewal notices so early. When the first notice came, I knew I had several months before my subscription expired, so I ignored it. Ditto the second and third notices. By the time my subscription really was about to expire, I had gotten used to just throwing away the renewal notices. My subscription expired, and getting a new one just seemed like too much of a hassle.
@mac-phisto: You get a free game CD/Download for the trial.
And the original game is really only about $20 now anyways, also comes with a free month of play.
Actually...while they get moolahta up front it creates a liability (unearned subscription revenue). Nobody likes a liability yo!
Dorky pseudo accountant/analyst/automotive mechanic/salad dressing expert out!
@gStein: No, no, no -- if only my drug dealers were this convenient. Drugs delivered straight to my home, payment made by easy CC or money order -- automatically renewed, no confirmation of addiction required. Sounds like heaven.
Any drug deal I've ever done, I've had to travel to a crappy part of town, carry enough (and risk being mugged for) cash for the purchase, and spend an hour of my time making "conversation" before they cough up the goods.
The described model would totally be worth it for drugs. Magazines, not so much.
@korin43: I'm actually in favor of corporal punishment inflicted on apostrophe abusers. And "its" versus "it's" should be punished by something not seen since The Inquisition.
@xtc46 - thinksmarter on twitter: It's kind of like how the better* drug dealers operate - just a taste! Free, on me!
* Err, worse. Yeah - worse!
@runchadrun: I tried to subscribe to a Conde Nast publication and they had NO way of signing up online without it automatically renewing "as a courtesy" as the expire date approached. Buried in the fine print, of course. Just for kicks, I checked all 1,000 of their mags (well several of their scores of them) and they all had the same renewal shotgun pointed at potential subscribers' heads.
The only way to opt out of this was to subscribe and check Bill Me Later, so I did.
Then (sigh) paid online via credit card once they sent me the paper bill.
Just... Brilliant.
This is the sole reason there are so many free trial's available.
People are very willing to take something free, and say "ill just call and cancel on day 13 of my 14 day trial!" and then they forget and say "well..I paid for this month, so ill call at the end of the month" then they just toatally forget.
Its a very good way to get people to buy your crap.