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Opt-out contracts – What to know about these subscriptions

DEFINITION

Goodfood, FabFitFun, Netflix, Spotify… More and more online companies are changing their business model: they no longer offer a specific product, but rather a subscription that gives access to a service allowing to receive goods or to access a virtual library. In order to attract customers, these companies offer their subscription as an opt-out subscription: consumers are given a free or discounted trial period and then automatically subscribe to the service at the current price.

What does the law say about this type of practice? What are the issues to consider when subscribing to these products and services?

 

WHAT THE LAW SAYS

The law does not prohibit this type of practice, as long as the consumer has consented from the outset to benefit from a free or reduced price period and to be automatically billed at the regular price thereafter. For example, if the merchant clearly states that the first month is free and that subsequent months will be billed at $10, the practice does not pose a problem.

On the other hand, if this information is not mentioned from the start, it may indeed be an illegal practice. In such a case, the consumer can contact the Office de la protection du consommateur.

 

TIPS BEFORE SUBSCRIBING

  • Make sure you know the terms of the contracts, especially the fees and the cancellation procedure. Initial offers are often very attractive and it can be tempting to sign up for a product or service without doing much research. Take a few minutes to make sure you understand the regular rates and how to unsubscribe. This will save you a lot of surprises and headaches in case you want to cancel the service!
  • Mark your calendar for the end of the trial period or initial discount. If you signed up knowing that you will want to unsubscribe, it is important to leave a note about this. Merchants do not send reminders that the trial period is coming to an end.
  • Go through your subscriptions a few times a year. A little $10 here, another $15, over there, there’s nothing to worry about! At least, that’s what we tend to think when we look at our payments individually. Do you really use all the subscriptions you pay for? Are there certain products or services that are repeated? Are you always satisfied with the price? At the end of the month, how much are you paying for all your subscriptions?

If you’re feeling overwhelmed by your finances or don’t know how to get started on a project, give us a call! We offer free budget consultations!