Digital subscriptions have experienced significant growth, with businesses offering subscriptions increasing by over 300% from 2012 to 2018. Subscription revenues from media and digital content are projected to rise by 13.5% between 2021 and 2025, with global consumer spending for subscriptions estimated to reach $1.26 trillion by the end of 2025 [d3ac0b5b].
While subscriptions offer convenience, predictability, and value for money, they can also accumulate and go unused or be difficult to cancel. The Federal Trade Commission (FTC) is investigating deceptive subscription practices, known as 'dark patterns,' and has proposed a rule to simplify cancellations for consumers. Companies like ScribeUp are providing services to help consumers manage their subscriptions. The subscription model is evolving, with a focus on delivering value and meeting customer needs. Artificial intelligence and machine learning are being utilized to enhance customer retention and tailor subscriptions to individual preferences. Technology has the potential to empower consumers in navigating the subscription landscape and safeguarding their interests. Data privacy and responsible data management are crucial considerations in the subscription economy [d3ac0b5b].
The FTC's proposed click to cancel rule amendments aim to address the challenges consumers face when attempting to cancel subscriptions. These amendments would require businesses to make the cancellation process as simple as the sign-up process and send annual reminders prior to automatic renewals. The Interactive Advertising Bureau opposes the proposed amendments, arguing that they would impose a one-time cost of $2.7 billion on businesses and have an annual effect on the national economy of at least $100 million [2f0d294c].
The opposition from online advertisers highlights the potential financial impact on businesses, raising concerns about the feasibility and implementation of the proposed amendments. However, the FTC's click to cancel rule amendments have received positive feedback from consumers who often struggle with canceling subscriptions. Many consumers unknowingly continue to pay for subscriptions they no longer use or want, resulting in significant costs. The proposed amendments aim to address this issue by simplifying the cancellation process and providing annual reminders before automatic renewals [7cce8b9f].
In addition to the FTC's efforts, a new Utah law has entered the conversation surrounding auto-renewal subscriptions. The law shifts the responsibility of canceling a subscription from the customer to the company. Under this law, subscription-based services are required to notify customers before any renewals are charged. Companies must provide notice via email or text, 30 to 60 days before the renewal deadline. Failure to comply can result in enforcement by the Utah Division of Consumer Protection. The law applies to any company conducting business in Utah and will take effect on May 4, 2024 [d1acfa3b].
However, the challenges and opportunities presented by the subscription economy are not without controversy. The US government has filed a lawsuit against Adobe Inc., accusing the software company of misleading consumers about termination penalties and making it difficult to cancel subscriptions. The Federal Trade Commission (FTC) claims that Adobe hides termination fees in the fine print of its subscription plans and calculates penalties as 50% of the remaining payments if customers cancel within the first year. The FTC also alleges that Adobe obstructs the cancellation process by complicating it and causing delays. Two Adobe executives, Maninder Sawhney and David Wadhwani, are mentioned as defendants in the lawsuit. Adobe's subscription business generated $4.92 billion in sales for the quarter ending on March 1. The FTC accuses Adobe of violating the Restore Online Shoppers' Confidence Act of 2010. Adobe plans to contest the charges in court [5c4ae6f2].
The Federal Trade Commission (FTC) has taken action against gig work company Arise Virtual Solutions for misleading people about the money they could make on its platform. Arise has reached a settlement with the FTC, agreeing to pay $7 million to workers who were harmed by the company's misconduct. The FTC alleges that Arise made misleading advertisements, claiming that people who signed up on their platform could get jobs paying up to $18 per hour doing remote customer service work. However, internal documents revealed that the average pay for jobs on the platform was $12 per hour, and 99.9% of consumers who joined the platform made less than $18 per hour. Arise also violated the FTC's Business Opportunity Rule, which requires that prospective workers receive key disclosures about earnings claims before investing time and money in a business opportunity. This is the first time the FTC has charged a company with that violation [fa242ded].
The challenges and opportunities presented by the subscription economy are driving innovation and change. As the subscription model continues to evolve, it is crucial to strike a balance between consumer convenience and protection, while also considering the financial impact on businesses and the broader economy [d3ac0b5b] [2f0d294c] [7cce8b9f] [d1acfa3b].