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Monthly subscription bills could exceed your budget. Here's how to control them

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When Mississauga, Ont.-based financial coach Vanessa Bowen sat down with a client last year to go over the woman’s finances, the pair realized something was wrong: a monthly Spotify charge had seemingly appeared out of nowhere.

Did she know she was paying for the music streaming app? No, because she does not use it. Did the company charge her by mistake? Probably not, Bowen told him. Then the woman remembered.

“She’s like, ‘Oh my God, I paid for my ex-boyfriend’s Spotify!'” Bowen shared. “She was spending all that money on someone who wasn’t even in her life anymore.”

Canadians subscribe to subscriptions left and right, and companies are only too happy to oblige. It’s quick and easy for the buyer, and a steady cash flow for businesses that can automatically renew subscriptions on a regular basis. But some people forget they signed up – and the bills start piling up.

“Maybe we use it for a few weeks, but then we forget about it,” Bowen said. “Life gets in our way…but that charge still hits our credit card, which still impacts our finances.”

CBC News spoke to experts who shared how to stay on top of those subscription fees — and what to do when you just can’t find the unsubscribe button.

“A fundamental change in the way companies do business”

A woman folds clothes in a warehouse.
A woman folds and packs clothes in the warehouse of a subscription clothing rental company in Stockton, California, September 5, 2019. (Jane Lanhee Lee/Reuters)

Anyone who subscribes to a newspaper can tell you that the model has been around for a long time.

But a wave of direct-to-consumer e-commerce brands in 2010 — like Dollar Shave Club, which delivers grooming products by mail — is what sparked the modern subscription boom, according to founder and CEO Adam Levinter. from Scriberbase and author of The subscription boom.

Now, that’s an ubiquitous fact of life. Sure, you probably have Netflix or Disney Plus, but you can also get a monthly mystery box full of cosmetics, or original tea and coffee flavors, or meal kits with pre-measured ingredients — until the end. teaspoon.

“The last 10 years has seen nothing but massive change in more and more companies moving in this direction, not just e-commerce companies, but platform companies, software companies, service companies “, said Levinter.

Financial services firm UBS forecasts the global subscription market to reach US$1.5 trillion by 2025, more than double the US$650 billion it was estimated in 2021.

WATCH | People cancel their subscriptions:

Cancellations of streaming subscriptions on the rise

One in three Canadians have canceled their subscription to streaming services in the past six months, according to a survey by the Angus Reid Institute.

“It’s a big fundamental change in the way companies do business. And at the same time, it’s a fundamental change in the way consumers interact with companies.”

Businesses are more interested than ever in building long-term relationships with the consumers who buy their products. While it was up to businesses to keep customers coming back for repeat transactions, the focus on subscriptions has changed the game.

“In a subscription business, the responsibility now rests with the customer, so the business assumes that the customer is otherwise satisfied with the product or service and will continue to bill that customer in perpetuity unless the customer decides to ‘cancel,” Levinter said.

Bowen, who runs a financial coaching company called Mintworthy Co., said the problem is people rarely want to part with their subscriptions. More than 85 percent of Canadians have at least one monthly subscription, an Angus Reid investigation from october found.

Vanessa Bowen, a Mississauga-based financial coach, says she helps clients manage their monthly subscriptions. “Life gets in the way, it gets in the way, but that charge still hits our credit card, which still impacts our finances.” (Submitted by Vanessa Bowen)

But the same poll showed one in three Canadians had canceled a subscription in the previous six months, with half citing the current cost of living crisis. Those who have clung to their subs might find it hard to tell for so long, Bowen said.

“Once you have a subscription in your life, even if you don’t use it regularly, your mindset comes to this point: ‘Well, maybe I’ll need it next month or next week,'” Bowen said.

“Once you have it, it’s very hard to say goodbye.”

A longer goodbye

Saying goodbye can be especially difficult when the company wants to say goodbye: the dreaded “subscription trap”. A Vancouver woman told CBC Cost of life last year she was forced to cancel her credit card after a company made it extremely difficult to cancel a subscription.

“It would help if there was more standardization of subscription contracts and time slots,” Kenneth Whitehurst, executive director of the nonprofit Consumers Council of Canada, said in an email to CBC News.

Cost of life26:06Subscription traps, sending money abroad — and who will make up Canada’s future workforce?

The United States is cracking down on companies forcing customers to cartwheel to cancel subscriptions, but consumer advocates say Canada is falling behind. Plus, we’ll tell you if it’s actually cheaper to send money abroad. We also explore Canada’s options for filling labor shortages as immigration rates continue to rise and birth rates continue to fall. Are temporary foreign workers the solution or do we need something more permanent?

Whether subscriptions can be canceled easily is a matter of opinion, usually related to a website’s usability, he added. The council doesn’t get many complaints about online subscriptions, but “I think people’s concern is that they’re allowing term deals with recurring payments, unintentionally.”

A man smiles at the camera.
Adam Levinter, the Toronto-based founder and CEO of Scriberbase and author of The Subscription Boom, says the subscription economy has fundamentally changed the way businesses and consumers interact. (Submitted by Adam Levinter)

“There needs to be clearer rules around cancellation, in general, for low-value recurring subscriptions.”

A Canadian company pleaded guilty last year to tricking shoppers into a monthly subscription to health and dietary supplements, and was fined $15 million following an investigation by the Bureau of competition. But the bureau is not a regulatory equivalent of the stricter Federal Trade Commission in the United States, because Canada’s consumer market is much smaller, Levinter said.

Horror stories led the US federal regulator to rise in power its enforcement action in 2021, after several prominent companies – from SiriusXM radio to Apple – were sued by customers who said the companies made subscriptions too difficult to cancel or committed in suspicious auto-renewal practices.

That’s why it’s crucial that companies make it easy for customers to reach them with questions and concerns — and give them the ability to control their subscription plans, Levinter added.

“If you make it difficult for the customer, you’re going to have a lot of problems,” he said.

“A Black Eye on the Merchant”

Customers use a TD ATM in Vancouver in 2018. (Darryl Dyck/Bloomberg)

Cutting your credit card is a desperate measure. But most Canadians will have an easier way to deal with unwanted subscription fees: they can ask their credit card company for a chargeback, in which a bank transfers money from the merchant’s account to the customer.

“Chargebacks are a black eye for the merchant,” Levinter said.

Businesses that accept Visa or Mastercard, for example, have a responsibility to keep their chargebacks below a certain threshold. If chargebacks are on the rise, that’s bad news for the business.

“You can have your card stopped being processed, which means that as a business you will no longer be able to process Visa or MasterCard transactions, and without the ability to process transactions you have nothing to do. “

The process is a bit fuzzier if you made a purchase with a debit card, because a company can’t protect you if you’ve shared your PIN or encouraged its unauthorized use.

Maybe you just want to cut your expenses for the sake of your wallet. If that’s the case, tracking monthly expenses — reviewing your credit card statements for an errant Spotify charge here or there — is the best way to catch the money slipping through the cracks, Bowen said. .

A host of subscription management apps have also sprung up in recent years, from MySubscribe to Mint to Bobby.

But auto-renewable subscriptions are a two-way street.

“I think companies should have [the] responsibility to remind consumers: “Hey, your subscription is about to expire, do you want to cancel?” and having an easy way to hit that undo button so we can say ‘thank you, goodbye,'” Bowen said. “That was nice, but I’m going to put my money into something else now.”

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