Customers fight surprising fees as online membership increases

When Jolene Stewart made an online order for lingerie from Rihanna’s line, Fenty x Savage, this year she inadvertently signed up for a subscription that charged her bank account every month in exchange for a credit for buying more bras and underwear. took.

Recently the 22-year-old Stewart of the college said, “It was part of a deal and I think I didn’t read the fine print.”

As soon as Stewart realized that he had been charged, he canceled the membership and opted to use the credits he had already paid. Three months later, Stewart discovered that Fenty X Savage was charging $ 49.95 a month for a membership he was sure was canceled – the company resumed his membership when he used the credit , She said, sharing screenshots of NBC News’ three payments.

When Stewart asked that his card be returned and his membership canceled, the company returned it only for a month. His cost in the ordeal was close to $ 150 which he never intended to spend.

“I love Rihanna and her products a lot,” she said. “So I was really surprised and I used to think I wouldn’t shop there anymore.”

Savage X Fenty, which declined to comment, is far from the only company drawing in new customers with online subscription programs. As online retailers seek new revenue sources, more companies are offering membership models to lock in customers. Subscription-based services automatically deduct money from consumers’ accounts, without making consumers feel that they have made a purchase.

“Everything has become a subscription these days, creating software for merchants to manage online subscriptions and tracks in over 23,000 subscription e-commerce companies,” said Patrick Campbell, CEO of Provivel. “Anyone under the sun realized that subscription-based models are a better revenue stream.”

But customers are holding on to the things they say they don’t mean to buy. Due to the prevalence of fraud in online shopping, banks and credit card companies have long had customer-friendly policies, which make it relatively easy to fight suspicious or unwanted charges and get refunds. Traditionally refund costs have fallen on merchants.

So merchants are pushing customers back to get their money back and making it even more difficult. Online retailers have even formed a special advocacy group within the Merchant Risk Council, an e-commerce industry association focused on ways to take more financial hits from customers who dispute membership fees .

An estimated 75 percent of all returned payments to merchants in the online subscription space could be passed on to customers who paid for the services, but then claimed they did not intend the charges, according to a study by research company Aite Was and did not face charges, which was sponsored by a MasterCard company.

Friendly fraud

Subscription services have been on a roller coaster through the epidemic as more shoppers ordered goods online and then realized they were paying for things they did not want.

Online merchants that sell goods and services that require recurring payments increased to 70 percent in June and then decreased to about 40 percent in October. This means that the industry’s monthly recurring revenue has increased by only 30 percent, according to Profitwell data. People simply decided that they did not want to use those services or used those services for which they had signed up, in some cases, they did not realize that they had signed up for subscriptions, Leading them to charge their accounts as fraud. , Campbell said.

The practice of canceling unsolicited subscriptions has become so common that e-commerce analysts call it “friendly fraud”, because the customer says the charge was inadvertently and therefore incorrect, even if the customer has signed up for the service , But forgot to cancel. According to a study by Aite, customers have charged even more charges in recent years, adding simple ways to dispute unwanted recurring payments within their mobile apps. It also found that disputes double with every new way for customers to challenge unwanted fees.

Merchant Risk Council CEO Julie Fergerson said the disputes cost e-commerce companies billions of dollars per year, as well as the cost of customer support and bank fees to reduce transactions. For online subscription services, 60 percent to 80 percent of fraudulent claims by customers can be met with charges for services to customers, Fergerson said.

“It’s growing every year, and it’s spiraling out of control. Everyone’s just been trained to call their bank and this bank will take care of you. It’s a whole zero-liability model from card issuers Comes from which convinced people. Buy online years ago, “Fergerson said.

This puts Onus on merchants to pay disputed claims, and makes it relatively easy for customers to call their banks to charge a serial fee, even though technically they signed up for services and simply forgot to cancel Are.

Card issuers, such as Visa and MasterCard, instituted new rules this year requiring merchants to send information, as they free customers from subscriptions before paying a fee, as well as how to cancel. Explicit instructions in.

new tricks

In response, customers are finding attractive ways to attract customers with free trials. Then, when customers try to unsubscribe, they are discouraged through the difficult cancellation process.

“Before the epidemic, Hulu allowed you to end your free trial even if you canceled. Now, when you cancel your free trial, you lose immediate access to their services. , Even if you have time left now, “said Joshua Brown. Founder of Don’t Pay, a company that specializes in helping consumers cancel and fight unwanted subscriptions. “This recent introduction is a dark pattern designed to cancel out consumers expecting it to be forgotten. Netflix, meanwhile, has eliminated all free trials.”

Hulu did not respond to requests for comment. “We’re seeing different marketing promotions in the US to attract new members and give them a great Netflix experience,” Netflix spokesman Ebony Turner said in a statement.

Companies are also raising prices on recurring charges. The average price of membership rose 18 percent during the epidemic, according to data from more than 100,000 subscriptions that monitored Not Pay and shared exclusively with NBC News.

Combined variables make it more difficult and expensive to opt out of membership. This is not a misleading practice, said Ryan Callow, a law professor at the University of Washington who studies the manipulation of digital markets, as traders are not usually given the misinformation that customers will be charged monthly. But the fact that a practice is not misleading does not mean that it is appropriate.

“When companies make it difficult to cancel savings from subscriptions or deliver on promises and then the price goes down, those practices will start to cross into deceptive territory,” Callow said.

Get results

Some customers are finding that complaining on Twitter is the only way to get answers. Tanya Janaka signed up for a monthly subscription to Adobe Acrobat Pro this year, creating content for online safety training courses through her business, We Hack Purple Academy. When she tried the service, Janaka quickly realized that this was not a device she wanted to use again.

But like so many others who sign up for membership, Janka forgot that she had subscribed. That is, until months later, when his accounting software reminded him that Adobe had charged him $ 14.99 a month, costing $ 119 in total for a service he once used and forgot.

Janca said that when he called to cancel his subscription, Adobe told him it would cost $ 30. She said that when she tried to cancel the automatic renewal setting on her account, there was no online way to do so. So she went to the customer service chat option, which took 45 minutes. She said she was told that even though she had canceled her membership, she could not stop the auto-renewal until she officially expired, meaning she would have to cancel months later.

Frustrated, Janka was taken to Twitter, where she complained about her to over 32,000 followers. Someone from Adobe saw her tweet, and the company canceled her membership altogether.

Janaka was asked for clarification about the fee, stating that he would have to pay to end his subscription and in an effort to cancel the automatic renewal on his account, Adobe provided a link to his membership policy and commented further Refused. The written policy allows a cancellation with a termination fee, and states that customers can cancel at any time.

“It resolves not for me personally, but for other users,” after resolving the issue, Janca tweeted, acknowledging that if she was a little social media, after which she would post her She was not so lucky if she could have stayed the complaints.

Avoid charges

Experts advise customers who do not have an effective Twitter follow-up to keep a close eye on bank accounts and use the bank with a mobile app that reports a cut at any time. Otherwise, a forgotten subscription could easily be added, as Stewart did for Savage X Fenty customers.

“At least I was able to warn my friends,” Stewart said, adding that she has become wary of all retailers selling online. “I’ve found that with a lot of subscription services, you have to go through like 20 pages to cancel.”

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