In my last post ""Automatic Renewal" - Renewal Rates & Fool's Rate Go Up", I said I would go more into why I think people can be fools if they do automatic renewals, without having the benefit of an online Virtual Credit Card Account Number as I use. Well, I should say that their actions are foolish vs. they themselves being fools, but the truth is that in most automatic renewal situations, people's actions are only foolish if they don't take the time to meticulously read the T.O.S. or User Agreement's "fine print". My contention is, though, that all important information that the consumer needs to know about the automatic renewal process needs to be upfront, clearly & conspicuously disclosed in a comprehensive way, right where the consumer is filling in his contact info.
Let's see one complaint from a 17 year old that wound up being "his fault", because he didn't communicate his cancellation notice according to the terms outlined in the seller's user agreement. He only e-mailed them back vs. using the online "Cancellation Request Form", after receiving an early notification e-mail from the domain name seller, Globat. On this SitePoint Forum Post, "liam UK7" says "..i get a notification from paypal saying i have had about $8 taken from my account for a Domain Guard for Globat. Confused about the payment i email Globat, only to be notified that i have an outstanding bill of $118. And that they never received any cancellation. I spend all day explaining to them that i sent the email, and that i didn't want the account and can they please close my account. They say they can close my account, but i need to pay the $118 before they will cancel my account." He goes on to say "Today i wake up to find that $95.40 has been taken from my Paypal by Globat, i don't know how, i didn't send the payment, its done it by itself. And when i email globat i haven't received any reply." I explained in "Is an "Automatic Renewal" a Deceptive Marketing Tool ? how PayPal's "Buyer Complaint Policy" does NOT COVER SERVICES!
Let's see another complaint.
Alan Stafford posted "Symantec--Get Out of My Face!" in which he said he got plenty of early notification e-mails; "But how do I know that renewing will add 12 months of subscription time to the end of my current 12-month term? Does it start the new subscription on the day I renew--so that I only get 11 months out of the initial subscription?" I found that point very pertinent, because I made the mistake of following one of those Norton AntiVirus early warning notice's suggestion of "Renew Now (Recommended)" about 3 weeks before that year's subscription service was up. I learned that by doing so, I actually relinquished the last few weeks of what I had previously paid for, and started a new year at that time. Maybe that is why "As many as two-thirds of antivirus users postpone their subscription renewal,..", as it says in this 11/22/06 PC World article entitled "Antivirus Vendors Shift to Automatic Fees".
I just found "A Quagmire Of Classmates" from a blogger who found out the hard way that Classmates.com has an automaic renewal default setting for their "Gold" Membership. He found that "Unfortunately there is no link, no apparent way to contact customer service via the website." This information reinforces my concerns about Classmates.com in my post entitled "Classmates.com = A Deceptive & Misleading Website?".
At the risk of repeating myself from my last post, I'm against all automatic renewals because they put the final responsibility on the buyer to notify the seller that he/she wants to cancel. It doesn't matter how much "good will intent" there is on the part of the seller to "help" the buyer not miss out on the seller's buyer benefits. After all, it is the buyer who determines the value of what he is buying at the time of the renewal, and not the seller. Just doing a series of reminder notices alone is fine without the "penalty" of "auto-renewal" (with a pro-rated refund, if available), especially if the buyer wants to go, or has already gone, to a competitor for whatever reason.
Answers.com definition of "Automatic Renewal" says "Method of renewing magazine subscriptions without requesting the subscriber's permission after the initial order. The subscriber is frequently charged for each renewal by credit card number. There are complex legal issues to consider when doing automatic renewals to prove that subscribers are not being billed or charged for something they did not order."
Evidently, the many sellers using auto-renewal (like ConsumerReports.org) have thoroughly looked into the complex legal aspects of it, and have realized that as long as they meet certain requirements, it effectively works to build their renewal rates. CR.org says for annual subscriptions "..an e-mail reminder approximately two weeks before their subscription automatically renews. Upon receiving this e-mail, a subscriber can cancel their subscription at any time right on our website before it renews through the "My Account" link located at the top of any page on our site." Since I respect CR.org, and I am a subscriber (using my "one time use" Virtual Credit Card Number), I suggested to them that they increase the number of reminder e-mails they send out.
I still contend that other much less reputable publications than WebmasterWorld.com and ConsumerReports.org are counting on people forgetting the renewal date, or not paying attention to the reminder e-mails, or not being organized enough to follow through on them, or not taking the time to read the "T.O.S." or "User Agreement" fine print, or not notifying all their subscribed publications of their newly changed e-mail address, or not making sure that important e-mails are not being caught in their e-mail spam filters, or even subscribers just putting off reading their e-mails while in a "vacation mentality" for two weeks or more.
I also contend that "Automatic Renewal" is very similar to what the FTC calls "Prenotification Negative Option Plans", which they now give a formal "Prenotification Negative Option Rule" for. The New Zealand Ministry of Consumer Affairs calls that same thing "Unsolicited Services", and also classifies it in general as "inertia selling of services". The "inertia" shouldn't have to be there, if the seller has a valued service, is competitive, and has made the appropriate effort to contact the buyer early on for the renewal subscription. Auto-renewal puts the "responsibility to cancel" on the consumer-buyer vs. the "primary responsibility of renewal" on the seller to "earn the renewal".
This 2/1/98 article from "Folio: The Magazine for Magazine Management" says: "... the advantage of this arrangement--technically called a negative-option continuity series--is that it puts the force of inertia on the side of the marketer." It goes on to say "...a poorly executed pitch could attract the attention of regulatory agencies and/or attorneys general, as it's illegal to bill someone for something they haven't ordered. And it would take only a few publicized instances of things like this to permanently taint the method and virtually kill every publisher's chance to make it work. So it's crucial to make sure your statement of the autorenewal offer is beyond reproach, both legally and ethically."
Maybe, if enough complaints are logged into the online "FTC Consumer Complaint Form", the FTC will have an "Automatic Renewal Rule" to better protect the consumer, AND to to help the reputable sellers serve their subscribers better.
See my next post: "A Solution For "Auto-Renewal" and New FTC's Negative Option Marketing Emphasis"
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