Polly Mackenzie, Director, Money and Mental Health

Netflix and bill

Toucanbox. Audible. Graze. Netflix. Weekend Box. Scribd.

Six subscription services I’ve signed up to for a free trial, only to forget to cancel them in time, and kick myself when the boxes kept coming and the bills kept arriving. Toucanbox – a craft kit for pre-school children – took me months to cancel, even though I knew I could buy five times the crafting materials for the same price if I shopped around.

Subscriptions are a booming industry – because it’s a clever model that exploits some of the inherent weaknesses in the human character, as I’ve learned to my cost.

To use the language of behavioural economics, it “shifts the default”. Instead of having to chase the customer for every repeat purchase, the subscription retailer can rely on repeat business month after month unless or until the customer opts out. This has long been the preferred model for newspapers, magazines as well as club and gym membership, but you can now buy anything from razors to leggings, from vinyl records to beauty products by subscription.

If you’re on top of your subscriptions, shopping around, and cancelling on time – that’s great. Getting nappies delivered every month has hugely improved my life! But the danger for consumers in this model is that they need to invest much more cognitive energy in self-monitoring and motivation. That can be particularly challenging for consumers with mental health problems.

Today's announcement

So it’s great to see the Chancellor announce in today’s budget that he’s going to be making efforts to crack down on some of the worst behaviour in the subscription industry. We first called for action to improve this industry back in July last year, in our paper In Control.

We highlighted two big problems I’d like to see the Chancellor tackle, when the detailed proposals come out next month.

  • Subscription models where you accrue “credits” with a retailer, instead of being sent a product each month. Because consumers don’t receive anything, they can often forget about the subscription entirely, and accrue £100s in credits which are non-refundable.
  • Cancellation processes that are hard to find and/or navigate. In particular, many companies require customers to make a phone call in order to cancel a subscription. They choose this “high friction” pathway to limit the number of people who cancel; it also allows them to put direct pressure on consumers not to cancel. Both are particularly difficult for consumers with mental health problems to navigate.

Our research

We first identified the problems with subscription retail in our report ‘Money on Your Mind’ in April 2016. Consumers with mental health problems told us about the challenges they faced in budgeting, making phone calls, and monitoring their spending, all of which make it hard to navigate subscription retail. Some mentioned particular subscriptions that had cost them a lot of money, while not being used, and been difficult to cancel. Many consumers reported feelings of guilt when products they didn’t want or need arrived.

“I get confused easily and sometimes can’t remember what I even signed up for … then I don’t sleep and get more anxious”

“I took out a [subscription service].  They refused to cancel it over email – said I had to call in.  I couldn’t call due to phone anxiety.  I paid for another 12 months.”

Subscriptions can be a valued way for consumers to acquire products and services they want on a regular basis. For people who can’t get out and about, they can even be life-changing. But better regulation is needed to make sure irresponsible subscription retailers can no longer manipulate their customers and exploit our cognitive biases.

What do you think?

What are your experiences of subscriptions? Have you had difficulty cancelling services after you no longer needed them? Do you have a backlog of unopened boxes cluttering up a cupboard or living room? Or have subscriptions improved your life?