In an increasingly digitalised world, consumers are being increasingly manipulated into “vendor lock-in” in every aspect of their lives. It is no longer only gyms and network providers, but now cafés, news sites, beauty, clothing, pet food, wine, restaurants, video streaming, taxi services, music streaming, car hire, food delivery, e-commerce and even pubs that are taking monthly chunks out of consumers’ paychecks. Even some generative AI companies like the NeevaAI search engine are looking at deploying subscription models.
Companies are making single purchases more expensive, more inconvenient and sometimes just impossible in an attempt to encourage subscriptions and consumer loyalty. But in an increasingly turbulent post-pandemic era, it makes sense that companies are trying to “lock in” their consumers, who will then pay a dependable amount to them every month.
It will be a shame if, eventually, every good and item we consume must come from a company to which we subscribe. This would have the effect of outpricing many services and goods from those on lower incomes, pushing out smaller businesses and limiting the variety in our lives. It could divide the population further into different tribes, each loyal to particular companies.
In some cases, however, the subscription model does make sense. It certainly has benefits for the consumer in terms of convenience. Being able to pay the same provider a fixed amount every month, often automatically, is appealing, especially as people become more time-poor. Feelings of reliability and trust are often fostered when you have a subscription service you are happy with. But price hikes, hidden fees, fake reviews, terrible customer service and impossible-to-cancel contracts make some subscription services insufferable and unreasonable.
On 20 April 2023, the UK government announced it would be reforming and boosting consumer protection rights and competition rules. These rules will crack down on what it considered “subscription traps”. It declared that such traps, in which businesses make it difficult to exit a contract, will be stopped.
Under the new rules, businesses must provide clearer information to consumers before they enter into a subscription contract. They must issue a reminder to consumers that a free trial or low-cost introductory offer is coming to an end, and a reminder before a contract auto-renews onto a new term. Finally, they must ensure consumers can exit a contract in a straightforward, cost-effective and timely way.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
If these rules are not followed, companies risk hefty fines from the competition and market authority, which will compensate the affected consumer. If subscriptions are to be the dominant method in which we buy and consume our goods and generally organise our lives, they need to be done in a way that is fair to the consumer. Easily controlled, transparent and dependable subscription services in all sectors need to be introduced.