APPLE

Apple’s Opens Auto-Renew Subscriptions To More Apps

But consumer advocates say we should beware the lure of in-app subscriptions

APPLE
Illustration: Diana Quach
Jun 13, 2016 at 8:50 AM ET

In a move that entices developers but may be problematic for consumers, Apple plans to open up in-app subscriptions to services beyond streaming and media, so that any type of can get in on the cyclical revenue, including games.

As a perk to developers, Apple will also lower the typical 30 percent cut it takes, cutting it to 15 percent for any apps that can hook consumers to a year-long subscription. New York Magazine points out that this is a boon for developers, but it’s also “not difficult to imagine free-to-play games like “Clash of Clans” offering subscription fees in lieu of micro-transactions,” as a result of the changes.

Apple’s senior vice president of marketing, Phil Schiller, said that these apps will be consumer friendly—they will be given the option to opt-out, and if they don’t take action, the subscription will terminate instead of auto-renewing. “We’re trying to protect the customer from surprises in pricing,” Schiller told The Verge, and the app store will make it “even easier for [users] to manage subscriptions.”

“One of the worst single worst processes in the consumer world is the automatic renewal process and cancellation process,” consumer advocate Christopher Elliott told Vocativ. Elliott said these are among the top complaints he receives from consumers—that “they were on some kind of auto-renew and didn’t know they were going to renew, and now they’re stuck with another year of a service that they didn’t want.”

Consumers can subscribe to nearly any product or service these days, from beauty and grooming products to food, snacks, and clothing services, to streaming media to medicinal marijuana. A study from Hitwise found that in the last few years, visits to subscription box sites like Birchbox have increased by 3,000 percent, with monthly rates ranging from $12 to as much as $300 a month. Amazon has had notable success luring customers to its $100 annual fee for the Prime service, which offers perks beyond free two-day shipping, like their exclusive streaming content. Some 73 percent of people who try the 30-day free trail opt in, and 91 percent sign on for a second year.

But consumers should be forewarned that the easier it is to subscribe to an app, the more likely you’ll do so without necessarily understanding what you’re on the hook for, and your bank account can suffer. Maybe the fine print is buried at the bottom of an email. Maybe you have to email someone and wait for a response. Maybe you have to call someone during limited hours. All this amounts to a deeply dissatisfied customer who has to jump through too many hoops to disengage.

A range of notable instances of angry consumers who were charged without agreeing to be have made headlines in recent months. Spotify has been notoriously difficult to opt out of. Tidal got grief when it continued charging customers $19.99 even after it indicated to users that it canceled subscriptions. The fix was a refund, with another three-month subscription tacked on, greatly increasing the odds that the same scenario would play out again. Tinder has an auto-renewal feature some warn is not exactly easy to get out of and a refund process that’s even more obscure.

The Ringer recently looked at the glut of apps that sneakily grab your monthly or annual financial commitment without your obvious consent. Writer Alyssa Bereznak documents just how hard many subscription-based apps make it to opt out of the services, leading to unexpected charges, unwanted goods or services, and a labyrinth of frustrating customer service systems that require lots of free time and vigilance—during working hours, naturally—to sort out.

“Google an app’s name alongside the word “cancel” and you’re likely to find a rage-filled message board of people describing their long and agonizing journeys to freedom before you find a path to dumping the service,” Bereznak writes.

Lingerie service Adore Me has come under fire for charging customers monthly fees they didn’t realize they were agreeing to. Business Insider documented the company’s tactics—by giving customers the option of a full price pay-as-you go option or a cheaper VIP mode that hooks them to monthly fees. The latter is, of course, nearly half as expensive, and though there’s clear disclosure that it’s a membership, opting out becomes less clear—you either shop or skip shopping by the 5th of each month are are charged 39.95, and the emailed reminders to do this are easily overlooked or filtered to junk mail. They also send text notifications. Nonetheless, customers say it’s not that easy to ditch on the billing cycle, to which their F rating with the Better Business Bureau attests.

“With 6.8 billion potential subscribers on mobile, social and web, the market is ripe for the business models first made popular by companies such as BirchBox and Dollar Shave Club,” writes lawyer Andrew Klungness in an overview of the current state of legislation at retail law firm Bryan Cave. That can make for lucrative profits for subscription-based companies, but they warn about the legislation that leads to lawsuits, citing auto-renewal cases against satellite radio company Sirius and crowd-sourced business review site Angie’s List.

Sirius paid $3.8 million in a class-action settlement in 2014, in large part over consumer difficulty cancelling contracts, and Angie’s List had to fork over $2.8 million that same year for auto-renewing members at a higher rate than disclosed. Some 24 states have statutes that, Klungness writes, require companies to disclose auto-renewal policies in a “clear and conspicuous” manner, and some states require affirmative consent and must make clear how customers can opt out or cancel a subscription.

Because of this rising issue, there are now apps like True Bill that help you deal with all those subscriptions by identifying recurring charges in your bank account that may be unwanted, then cancelling them for you. TrueBill CEO Yahya Mokhtarzada told The Ringer that Fabletics is one of the top companies they’re asked to help cancel—an athleisure subscription service that’s been accused of forced membership and hidden charges. Mokhtarzada started TrueBill after having a similar experience—he discovered he was being charged for an in-flight Wi-Fi plan he didn’t remember signing up for.

Elliott says these processes are absolutely difficult on purpose. “They do everything they can to push, prod, and entice you into renewing, including the infamous opt-out clause, which says you have to opt out and otherwise we’re just going to assume you want this. And no one wants this.”

He calls that opting-out trick the digital version of the Chinese finger trap. “There’s a trick to it, and not everyone knows what the trick is,” he says. For consumers embarking on a world of even more apps with subscriptions, he says you “have to read the fine print. It’s like they say, the devil is in the details.”