From gym memberships to wellness apps, Australians are being warned to watch out for "subscription traps". (Pexels: William Choquette)
In short:
The federal government is warning consumers to be alert for "subscription traps" when signing up for new services in 2025.
The "dodgy marketing practice" is reportedly on the rise, making it easy for people to sign up to a subscription service, but difficult to cancel it.
What's next?
The federal government says it's working to legislate a general prohibition on unfair trading practices, including subscription traps, this year.
For many Australians, the new year brings a range of new goals and resolutions, whether it be joining a gym, subscribing to a wellness app or getting healthy with a meal-kit provider.
While these subscriptions should be easy enough to cancel, some are operating in what's described as a “subscription trap”, using unnecessarily convoluted strategies to make it difficult to unsubscribe.
The federal government says there has been a rise in unfair trading practices and it is working to legislate a general prohibition on businesses that use them.
But in the meantime, there's nothing stopping them using tricky tactics, so what can consumers do to protect themselves?
A '"subscription trap" usually involves an unnecessarily convoluted process to cancel an unwanted subscription or membership. (Pexels: Liza Summer)
What is a subscription trap?
Luke Nottage, Professor of comparative and transnational business law at the University of Sydney Law School, said a subscription trap is where a business makes it challenging for a consumer to cancel their subscription.
"It's essentially where a business supplier gets a consumer or perhaps another small business, to easily sign up to an ongoing subscription, but then makes it difficult to cancel or get out of that subscription," he said.
"And it's an example of an unfair trading practice which isn't readily covered by current provisions under the Australian consumer law."
A recent report by the Consumer Policy Research Centre (CPRC) found 75 per cent of Australians have had a negative experience when trying to cancel a subscription, and 32 per cent felt pressured into keeping a subscription they wanted to cancel.
Forced to use an old card
When Newcastle man Campbell Moore attempted cancel a subscription to an unwanted music service, he said the task was close to impossible.
"I tried to cancel it, but the cancel button on the website just did not work," he said.
"I emailed support and didn't hear anything, in the meantime they charged me an extra round, so there was another 150 bucks out of my account."
Mr Moore said after sending more unanswered emails, he decided to change his credit card linked with the subscription.
"The only way I could get out of it was by putting an old, expired card into my account, which meant that I wasn't no longer charged."
Lucy Irvine says cancelling her gym membership took more than a month. (Supplied: Lucy Irvine )
It's something 26-year-old Sydneysider Lucy Irvine can relate to.
In 2023, she tried to cancel a gym membership, which became more than a month-long ordeal.
"There was no clear like cancellation button [on the gym's website]," she said.
"They present you with every option other than cancellation, which is very frustrating."
Ms Irvine called the gym, which said she had to come in-person to cancel her membership.
"It took forever to bring myself to go, and when I finally went I was told the person who does the cancellations had gone home for the day and that I had to come back again later."
Ms Irvine said she eventually was able to cancel, but it took more than a month, all the while she was still being charged.
"I really couldn't afford it anymore," she said.
"So that was stressful in itself."
What can consumers do if they suspect a trap?
Dr Nottage said sadly, under the current law, it's often challenging to argue subscription traps as misleading conduct and trade.
"There’s an argument that if you say you can manage your subscription online but then you go through and you can do everything but cancel it, that’s not allowing you to manage it," he said.
"But if it ends up in court, I think the regulator and thereby consumer interest will lose under the current law."
Dr Luke Nottage says changes to Australian consumer law are needed. (Supplied: University of Sydney)
After his own experience, where he struggled to get out of an unwanted online newspaper subscription, Dr Nottage reported it to the Australian Competitions and Consumer Commission.
In documents seen by the ABC, the ACCC made a record of the complaint, but said it's main focus was on broad and national issues.
It suggested Dr Nottage contact his local consumer protection agency, such as NSW Fair Trading, but couldn't guarantee they would resolve the issue.
"It’s hard to persuade the regulators to even try to use the powers that they have and if it does end up in court as I’ve said they’re going to struggle to win except in the very worst cases," he said.
"That’s why we need some sort of new regulatory prohibition."
Plan to tackle the issue
On Friday, the Minister for Financial Services Stephen Jones said the federal government would continue to push to legislate a general prohibition on unfair trading practices, including subscription traps.
"We've done a consultation over the past few months," he said.
"Really, these subscriptions or memberships should be just as easy to get out of as they are to sign up to.
"We want to get the laws introduced as soon as possible, but we want to ensure that they're right."
Mr Jones says it's a project the government will be focusing on this year, but could not confirm it would happen before the looming federal election.
In the meantime, he urged Australians to be on alert.