The Ignominy of Auto-Renewals

Are You Paying For Automatic Renewals Without Knowing It?

Nov 01, 2018
Marketing

SMITH BRAIN TRUST – Roland Rust was livid when he was notified that his subscriptions for two prominent business magazines had been automatically renewed, without his consent. He promptly canceled both. As the executive director and founder of the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business, Rust wants to call attention to what he calls unethical business practices.

“When you subscribe, somewhere in the fine print they now say you’ve agreed to automatically renew, every year, and they renew you, without ever making that salient,” says Rust, a Distinguished University Professor and the David Bruce Smith Chair in Marketing at Maryland Smith. “That’s not fair; it’s not right to hook people into something that automatically renews without their real knowledge. Nobody reads the fine print. That is a deceptive business practice.”

Rust says any company doing this now “should be slapped on the wrist,” and it’s not just publishers. He recently ran into similar situation when registering for a running race on an online platform that helps people register for events. Rust discovered the platform was hiding something in the fine print that runners click through when registering: “If you click ‘agree,’ a month later the platform charges your credit card a $79 fee for supposed unspecified ‘benefits’ with automatic yearly renewals. If you don’t read the fine print carefully, you’re on the hook for that payment. It’s really outrageous.”

Companies often use automatic renewals, but usually it is made clear to the customer that there will be an automatic renewal. It’s the sneakiness that he says crosses the line. Customers can, of course, read the fine print to avoid these renewals, Rust says. But burying the details turns consumers into victims.

“This is totally screwing the customer," Rust says. "There’s no way to say it nicer than that.”

In July, tighter auto-renewal laws went to effect in California, where an Auto Renewal Task Force of local prosecutors is working to combat these practices. In October, Spark Networks, which owns dating websites including Christian Mingle and Jdate, was ordered to pay a $500,000 fine and nearly $1 million in restitution to customers whose subscriptions were automatically renewed, following an investigation by the task force.

But nationwide, there is little being done to combat these business practices, Rust says. “The only thing that can really stop it is public uproar,” he says.

Companies are using these tactics because they think they can, Rust says. “There really is no consumer protection anymore,” he says. “The companies set these automatic renewals up such that you can cancel at any time – if and when you notice. They are counting on a lot of people not noticing.”

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About the Expert(s)

Roland Rust

Roland T. Rust is Distinguished University Professor and David Bruce Smith Chair in Marketing at the Robert H. Smith School of Business at the University of Maryland, where he is founder and Executive Director of two research centers: the Center for Excellence in Service and the Center for Complexity in Business.

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