10/09/2019 | News release | Distributed by Public on 10/09/2019 04:57
For the past couple of years, deceptive practices by subscription businesses have been increasingly coming to the fore. From automatically converting free trials into expensive paid subscriptions, to making it increasingly difficult to cancel subscriptions, many companies have found novel ways to trick customers out of their money.
As we reported last year, one particular app on the iOS App Store made as much as $14.3 million per year in subscription revenue on the back of such unfair practices, whilst another tricked customers into signing up for a $156 annual subscription plan.
Then earlier this year, US-based lingerie retailer Adore Me was in the eye of the storm for enrolling buyers into subscription programs by default instead of them explicitly opting in. Shoppers were automatically signed up for a $39.95 monthly subscription program and customers realised it only after their debit cards were declined or when they checked their bank accounts.
The US Federal Trade Commission (FTC) did take action against Adore Me by asking it to pay $1.3 million to the customers affected by its practices. In addition, Apple also cracked down on apps which were misleading customers into signing up for subscriptions on the iOS App Store. It would have been hoped that regulatory actions and bans would have stopped other companies from employing such tactics, but clearly that's not been the case.
Match.com sued by the FTC
Deceptive tactics have no place in the subscription industryWhile Match Group has denied these claims, these allegations against a company which is the market leader in its space is definitely not a good advertisement for the subscription industry. The allure of subscription businesses comes from the fact that they are geared towards the customers, offering them products and services at apparently lower costs along with a payment frequency that suits their specific needs and the flexibility to opt-in and opt-out whenever they want. The use of deceptive business practices to boost recurring revenue stands in absolute contrast to the ethos of the subscription industry. Not only do such businesses lose out on revenue in the long run, it also impacts the reputation of the business and its leadership. Our advice to any young business in the space is that you need to stick to organic growth tactics. Sure, deceptive subscription tactics may lead to a temporary boost in revenues, but it is not going to help you win brand loyalty and credibility. Instead, focus on winning trust through transparent practices, employ a good subscription billing platform to gain a competitive edge in how your price and package your services, and deliver consistent value to your customers. Do all this and you will be well on your way to subscription success!