Are You Part of the Subscription Trap?
Subscriptions use to be used for trusty old-school products such as Reader’s Digest, gyms and motoring organisations like the NRMA.
Now, it’s more likely you’ll be shelling out for a whole new raft of subscription services which didn’t exist in the good old days.
But be warned, the subscription trap is still alive and well and many a profitable business is based on the well-known consumer failing called ‘set and forget it'.
A recent survey from the superannuation fund Rest highlighted the potential downside of the subscription economy from the consumer’s side.
We collectively lose about $4billion a year on various subscriptions we don’t use, or forget we have and don’t get around to cancelling.
Rest survey participants had an average of three subscriptions costing about $40 a month. It’s easy to see how it adds up when 1 in 10 spend more than $100 a month.
And guess what? It’s millennials who are most wasteful.
Sure, it’s convenient to pay once and get onwards, and maybe endless, delivery of services such as the streaming of TV or music, software and entertainment.
Newspaper companies are working hard to get people to pay for their news through subscriptions. They and others will throw in various sweeteners like low-price introductory offers and ‘free’ gifts like headphones.
In Australia, you can now get subscriptions for products that need to be replaced regularly, like razor blades, toothbrushes and even toilet paper.
And here’s how they get you.
First is the phenomenon of ‘set and forget it’. To put it simply, this means we buy a subscription or membership and forget we are paying for it continue to do so year after year.
There’s also a separate trick called the subscription trap which the Australian Competition and Consumer Commission warns about regularly.
It means you buy a product online and unknowingly, perhaps by not reading all the fine print, find out you have also purchased a subscription for some ongoing access or delivery for which your account will be debited regularly.
Some of these premium memberships are not cheap and not easy to cancel once you find out you have been fleeced.
The secret, although it’s not very undercover, is to check your credit card and bank account details to know where your money is going.
It’s sometimes our fear of discovering what we really spend our dollars on, which makes us avoid giving these important documents the scrutiny they deserve.
That’s just why some industries have been so adept at exploiting our weakness.
So subscribe to common sense and audit your accounts for any covert subscriptions and memberships. If you don’t know them or don’t want them, please feel free to cancel on sight.
If you go into another subscription, go in with both eyes open.
Any advice contained in this article is general in nature and does not take into account your particular objectives, personal circumstances or needs. If in doubt about your own situation you should seek appropriate advice.