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Buying Plans and Product Subscriptions

Subscriptions and memberships are unique purchases. You may have a subscription to access a collection of movies. Or, you could use a subscription service for razors and cosmetics. Sometimes, a surprise plan only reveals what product category will arrive, such as curated perfumes or seasonal snack boxes.

Some consumers find the wrong surprises in their buying plans. They might not realize they will face expensive charges until an auto-renewal kicks in. These plans can also be difficult to cancel.

If you're considering signing up for a plan, pause to understand the offer terms fully. Plenty of subscriptions benefit both the buyer and seller, but knowing the cancellation process and your rights before committing is still a good idea.

Three Types of Buying Plans

A subscription business model often means the seller regularly provides goods and services until the buyer cancels. These plans are also known as negative option programs because the service continues until the buyer expressly chooses to reject it.

Some plans send physical items like a jar of spice or a bottle of wine. Plans can also involve digital products like ad-free music streaming or online training courses.

Other buying plans give buyers exclusive opportunities to purchase products. For example, you could have a membership to a wholesale store that lets you buy items in bulk at a discounted price. Or, a membership could give you early access to sales and new product releases from the brand.

The Buyer Knows the Item Is Coming

In this plan type, you know that the seller will deliver an item on a specific date, such as the first day of the month. You must tell the seller if you want to skip an item in a given period. After skipping that delivery, the usual schedule will resume in the next period, unless you opt out again or cancel your plan.

The Buyer Doesn't Know When an Item Will Come

With a continuity plan, the seller doesn't notify you of an upcoming delivery. You agree to pay for future shipments from the seller whenever they come. You typically aren't able to opt out of a single delivery. Instead, you'd cancel the entire plan to avoid future purchases.

The Buyer Pays Membership Fees

These plans require you to pay a monthly or yearly membership fee, regardless of whether you purchase an item. For example, you may agree to pay $100 per year for the option to buy discounted items from a catalog.

Even if you don't use your membership benefits that year, you must still pay the membership fee. Often, sellers of these plans lure buyers with a free trial period, but it may come with strings attached.

Federal Buyer Protection Law

Consumer protection laws outline your rights when you buy a subscription or membership. The Prenotification Negative Option Rule is a key federal regulation.

This rule offers several protections for buyers, including:

  • The seller must explain the process for refusing an item and how to cancel a membership.
  • The seller must clearly state whether the buyer needs to make a minimum number of purchases to maintain or get the benefits of a subscription.
  • The buyer has the right to cancel the membership at any time unless they agreed to make a minimum number of purchases. In that case, the buyer has the right to cancel the membership as soon as they reach that minimum.
  • The seller must tell the buyer which item the plan has scheduled at least 20 days before its delivery. For example, a reading membership might show the title of the next month's book. The buyer has 10 days to choose whether to opt out of receiving that item.

These are just a few of the buyer protections the Prenotification Negative Option Rule provides.

State Laws for Buyer Protection

Many states have passed their own buying plan regulations in recent years. These state laws build on the federal rules by giving residents more legal protection and options.

A few examples of state laws for subscriptions and memberships include:

Check the laws in your state to see whether you have extra consumer protections.

Should I Sign Up for a Subscription?

The decision to join a buying plan usually depends on its value and terms. The plan's benefits should generally be worth the costs and terms you'd accept, at least in your personal view.

You should consider terms such as:

  • The length of a free trial period
  • Whether and how the fees can increase
  • Whether you must make a specific number or value of purchases to get the benefits
  • The deadline for opting out of a delivery
  • The process for ending your membership or subscription service

Consider whether you will save money with the plan versus other methods. For example, a retailer's plan might have a $100 yearly fee but promises a 25% discount on their products. The buyer would have to spend at least $400 that year to break even. If you only want to spend $200 with that retailer, it would save money to skip the membership.

Beware of scams, pressure tactics, and deceptive advertising. If an offer sounds too good to be true, that might be the case.

Automatic Renewal Terms

Many plans' policy statements renew them indefinitely until buyers deliberately cancel them. An auto-renewal plan means that the seller doesn't need to get the consumer's consent again before the next cycle.

Auto-renewal prevents interruptions to your plan benefits. Renewed subscriptions can shock buyers who forget to cancel before the next payment appears on their credit card bill. Sometimes, the seller might fail to warn the customer that the plan has automatic renewal.

When you buy a plan, check the disclaimers to see whether it will automatically renew later. Note the exact date when you sign up. Setting up a reminder or calendar event can help you track when to cancel the plan if you don't want to extend it.

What if I Never Signed Up for a Membership?

In many cases, sellers are willing to cancel an accidental plan and issue a refund as a good customer service practice. You may want to seek legal advice if you suspect that the seller tried to trap consumers like you. You can also dispute charges through your credit card company and report the seller to an agency like the Federal Trade Commission (FTC).

The law can shield you from a membership you didn't mean to join or purchases you didn't order. Sellers can't hide details and hope you'll just accept the charges later. They need your affirmative consent to add you to a membership.

The Restore Online Shoppers Confidence Act

Some retailers have used tactics known as dark patterns to trick customers into joining a paid plan. For example, an online checkout process might include a small checkbox to sign up by default unless you notice the box and uncheck it.

The federal government passed the Restore Online Shoppers Confidence Act (ROSCA) in response to rising problems with these deceptive sign-ups. This Act requires all subscription providers to clearly show the costs and material terms of the plan before it takes your payment information.

Canceling a Subscription

With the many subscription services available today, you might end up spending hundreds of dollars each month. You may want to cancel your plans and stop the recurring payments.

Canceling a one-time sale can differ from ending a subscription program. Sellers can't create artificial barriers to prevent you from canceling your plan.

Some sellers might try to force you to keep a subscription by:

  • Trapping you in a circular loop of webpage links or customer service agents without presenting an option to cancel the plan
  • Requiring you to cancel by phone but failing to answer your calls or keeping you on hold for an unreasonable amount of time
  • Failing to give you clear information about how to cancel the plan
  • Adding extra requirements before you can cancel the plan, such as purchasing a different product

Federal and state consumer protection laws make such practices illegal. Cancellation policies can vary between sellers, but the process must be easy for customers to complete.

Get Help With Subscription Laws

Problems with a paid plan can be frustrating, especially if a seller uses unfair tactics. You can file complaints with the FTC or another agency, but one-on-one guidance can also help. A consumer protection attorney in your state can review your membership and subscription issues.

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