Automatic subscription renewals have become increasingly popular among businesses and consumers alike, providing convenience and cost savings for both parties. However, these renewals can also lead to deceptive and unfair practices if not handled responsibly. In response, the International Chamber of Commerce (ICC) has released its first-ever set of principles for automatic subscription renewals to provide specific guidance to businesses and to promote fair and transparent marketing practices.
This article will outline the ICC principles and highlight five best practices businesses should apply when offering automatic subscription renewals. These practices include disclosure, consent, written confirmation, cancellation, and notice.
What are Automatic Subscription Renewals?
Automatic subscription renewals, also known as auto-renewals, recurring billing, negative option agreements, continuous service agreements, and continuity agreements, allow businesses to automatically charge consumers for goods or services unless and until they take affirmative action to cancel. This arrangement is popular among consumers as it offers the convenience of not having to constantly renew contracts for goods or services they regularly use. Free or discounted trials that convert to paid automatic renewals can also provide consumers with an easy means to sample goods or services.
ICC Principles for Automatic Subscription Renewals
The ICC principles aim to interpret the fundamental global standards of the ICC Marketing Code and offer specific guidance on issues unique to automatic renewals. These principles are intended to promote responsible, fair, honest, and transparent marketing practices and discourage practices that manipulate or trap consumers in automatic renewals.
Best Practices for Businesses
To ensure that businesses apply responsible marketing practices, the ICC has outlined five best practices that should be applied when offering automatic subscription renewals.
Disclosure
The material terms of automatic renewal, including recurring costs, how the price will be calculated, minimum commitments, and the cancellation policy, should be presented in a clear, prominent, and unambiguous manner to the consumer before they accept the offer. Businesses should also be transparent in advertising and marketing materials when goods or services are being offered as an automatic renewal, as opposed to a one-time purchase. For example, the frequency of charges and the price per charge should be included in advertising and marketing materials. The description of how the automatic renewal works should also be specific, such as “subscription continues until canceled.”
Consent
Marketers should obtain consumers’ consent to the material terms of an automatic renewal at the start of the contract. Consent should be freely given, unambiguous, specific, and informed. This means that businesses should clearly explain the terms of the automatic renewal and obtain the consumer’s explicit agreement before proceeding with the contract.
Written Confirmation
Consumers should receive confirmation of the material terms of the automatic renewal in a durable format, including information on the cancellation policy and how to cancel. This confirmation should be provided in due time and at the latest at the time of delivery of the goods or at the commencement of the delivery of the services.
Cancellation
Canceling an automatic renewal should be simple for consumers. Consumers should be able to easily find cancellation mechanisms, and cancellation processes should employ language that is easy to understand. The process of canceling a subscription should not be unnecessarily complex, and consumers should be able to easily confirm when they have canceled a subscription.
Notice
For longer automatic renewal terms (for example, annual subscriptions), consumers should be given the option to receive notices before being charged to continue receiving the goods or services. Consumers also should be notified before any material changes are made to an automatic renewal. For example, notice should be provided prior to price changes.
All notices should be provided to consumers sufficiently in advance so that consumers have a reasonable opportunity to cancel before the next charge, noting that what is reasonable will vary from subscription to subscription. Notices should be presented in a prominent manner and use language that is clear and easy to understand.
Applying the Principles
To ensure compliance with the ICC principles, businesses should take the following steps:
- Review and update marketing and subscription policies to ensure that they align with the ICC principles.
- Ensure that all marketing materials and subscription terms are clear, prominent, and unambiguous in disclosing automatic renewal terms.
- Obtain explicit and informed consent from customers at the start of the contract.
- Provide written confirmation of the automatic renewal terms and the cancellation policy.
- Make the cancellation process easy and straightforward for customers.
- Provide adequate notice of upcoming charges and changes to the subscription terms.
Benefits of ICC Principles
Implementing the ICC principles on automatic subscription renewals can benefit businesses and consumers alike. For businesses, the principles can help build trust with customers, reduce the risk of legal disputes, and promote responsible and ethical marketing practices. For consumers, the principles can increase transparency, provide greater control over subscription renewals, and protect against deceptive practices.
Conclusion
Automatic subscription renewals offer convenience and benefits to consumers, but they must be offered responsibly and transparently. The ICC principles on automatic subscription renewals provide businesses with specific guidance on how to offer automatic renewals in a fair and ethical manner. By following the principles, businesses can ensure compliance with global marketing standards, build trust with customers, and promote responsible marketing practices. Countries seeking to establish or enhance marketing self-regulation codes can also benefit from adopting these principles into their national codes.